Amount Deposited at Department’s Insistence for Mistaken 'Excise Duty' Liability is not ‘Duty’: CESTAT Allows 12% Interest on ₹20L Refund [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, allowed a 12% interest on refund wherein the amount deposited for mistaken ‘excise duty’ was at the insistence of the department and was not deposited voluntarily.

The appellant, M/s. Neha Power Tech (I) Pvt. Ltd., submitted that during the course of investigation, they had deposited an amount of INR 20,00,000/- at the insistence of the department. The Revenue contends that the said amount had been paid voluntarily and cannot be considered as a pre-deposit under Section 35F of the Central Excise Act, 1944.

The tribunal observes that it is an undisputed fact that the adjudicating authority has sanctioned the refund of the said amount but had not sanctioned interest on it, holding that the amount was not a pre-deposit. The same has been upheld by the Commissioner (Appeals) vide order dated 28.08.2025.

The counsel for the appellants submitted that the amount deposited by them during investigation cannot be construed as a voluntary payment towards duty but rather a deposit made under a mistaken notion as to their central excise duty liability, at the insistence of the Department.

K. Anpazhakan (Technical Member) found merit in the arguments and cases cited by the appellant’s counsel and held that the appellant is eligible for interest on the amount refund, at the rate of 12% from the date of deposit during the course of investigation till the date of refund. The bench relied on M/s Harrisons Industries v. Commissioner of CGST and Central Excise, Kolkata North (2025) wherein an identical issue was dealt with.

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