S. 11BB of Excise Inapplicable Where Amount Paid Under Protest Without Adjudicated Duty: CESTAT Directs 12% Interest On Refund [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, held that Section 11BB of the Central Excise Act, 1985 is inapplicable where an amount is paid under protest without adjudicated duty. The tribunal directed a 12% interest on refund.

The facts of the case are that the Appellant, M/S T T LIMITED, was engaged in the manufacturing of cotton yarn falling under Chapter 52 of the Central Excise Tariff Act, 1985. The Superintendent directed the Appellant to pay Additional Duty of Excise (AED) on yarn cleared to Domestic Tariff Area (DTA) and the appellant paid them under protest which was explicitly communicated.

Thereafter, refund was claimed as Appellant’s unit was debonded for conversion into the Export Promotion Capital Goods (EPCG) Scheme. The refund claim was sent for verification to the Superintendent-Gajraula via letter on 29.06.2022. The Appellant reiterated its stance that the duty was not applicable on cotton yarn sold in the DTA by a 100% Exports Oriented Unit (EOU) such as itself as per Notification No. 55/91-CE dated 25.07.1991 and they had made the payment under protest.

The impugned order was set aside eventually and appeal was allowed. The department was directed to process the refund with interest within 30 days from receipt. However, in the case of interest, the competent authority mentioned that the interest was to be calculated from the day after three months from the date of filing of refund application @ 6% per annum.

The Appellant argued that they were entitled to interest @ 12% from the date of actual payment as there was no ‘duty’ for the purposes of invoking Section 11BB of the Central Excise Act to grant less interest. Judicial precedents were relied upon.

The tribunal took note of Principal Commissioner Central Goods and Service Tax v. M/s Parle Argo Private Limited and held that when rate of interest is not prescribed, interest at 12% per annum is awarded on revenue deposit. The bench, comprising P. K. Choudhary (Judicial Member) ruled that the Section 11BB was inapplicable so interest was not to be calculated from expiry of three months from the date of filing of refund application. Instead, it was held to be calculated from the date of deposit.

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