2026-VIL-1122-CESTAT-ALH-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Refund of Excise Duty deposited under protest - Entitlement to Interest - Whether the appellant is entitled to interest on the amount deposited under protest when the refund is sanctioned after a considerable delay beyond the statutory period of three months – HELD - The amounts paid under protest against central excise duty demands constitute duty deposits within the meaning of Section 11B of the Central Excise Act, 1944, and not mere revenue deposits. The Section 11BB provides for payment of interest at the prescribed rate, currently six percent per annum, when any duty ordered to be refunded under Section 11B is not refunded within three months from the date of receipt of the refund application – The decisions of various High Courts and the Supreme Court consistently held that when a statute prescribes a specific mechanism and period of limitation for refund, such statutory framework must be adhered to and cannot be circumvented by invoking section 72 of the Indian Contract Act or Article 265 of the Constitution. While the appellant’s refund claim was filed on 28.04.2025 and sanctioned on 18.09.2025, which constitutes a delay beyond three months, the entitlement to interest arises only from the expiry of the three-month period from the date of filing the application - The appellant’s contention that interest should be payable from the original date of deposit is rejected, as the statutory provision governing interest on refunds is section 11BB which operates only after an order for refund has been made and applies only to delays in disbursement beyond the prescribed three months. The appellant is entitled to interest at six percent per annum under Section 11BB for the period commencing from 27.07.2025, being the date of expiry of three months from the filing of the refund application on 28.04.2025, till the date of actual refund - The impugned order is modified to the extent of granting interest as per the statutory provisions of section 11BB of the Central Excise Act, 1944 – The appeal is disposed of
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