2026-VIL-330-CESTAT-ALH-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Interest on refund of Duty Paid under Protest, Applicable rate of interest - Whether the interest is payable from the date of deposit of the duty, or from the date of expiry of three months after the date of filing the refund application – HELD - The provisions of Section 11B and 11BB of the Central Excise Act, which deal with refund of duty and interest on delayed refunds, are not applicable to the present case as the amount paid was not 'duty' but a deposit made under protest, prior to any adjudication. Unless the amount is appropriated against a confirmed demand through a proper adjudication order, it does not acquire the character of 'duty' and remains merely a deposit, retained without the authority of law. Since the department itself acknowledged that the levy was unsustainable and sanctioned the refund, the amount paid under protest cannot be treated as 'duty' attracting the provisions of Sections 11B and 11BB. Accordingly, the interest is payable from the date of deposit till the date of refund - In the absence of any specific statutory provision prescribing the rate of interest for refund of revenue deposits, the rate of 12% per annum is appropriate. The reliance of the Department on the provisions of Section 11BB and the corresponding Notification prescribing 6% interest rate is misplaced, as the same are inapplicable to the refund of deposits. Denying the rightful interest at 12% per annum would unjustly enrich the State at the expense of the citizen, violating the constitutional rights - The Department is directed to sanction and disburse the balance interest to the assessee at the rate of 12% per annum from the date of deposit till the date of actual refund – The appeal is allowed
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