2026-VIL-1121-CESTAT-ALH-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Refund of Revenue Deposits - Commencement of Interest - During provisional assessment of excise duty on chewing tobacco, Appellant deposited excess amount under protest prior to any adjudication or confirmation of demand. Subsequently, the Tribunal determined that the product was correctly classified and the higher duty was never legally payable. The assessee claimed refund with interest from the date of deposit, but the lower authorities restricted interest to commence only three months after the refund application filing date, applying section 11BB of the Central Excise Act, 1944 - Whether interest on delayed refund of amounts deposited under protest during investigation and provisional assessment stages, where no quantified demand existed at the time of deposit, is payable from the respective date of deposit or only from expiry of three months after refund application filing – HELD - The section 11BB of the Central Excise Act applies only to refunds of duty and not to refunds of revenue deposits. When an amount is deposited during investigation, adjudication, or provisional stages where no legal duty liability pre-exists and no quantified demand has been confirmed through valid adjudication, such payment retains the character of a revenue deposit and does not acquire the character of duty under the Act. Therefore, the restrictive conditions of section 11BB, including the three-month deferment period, cannot be imported into cases involving refund of revenue deposits. The distinction between duty and deposit is material for determining the applicability of section 11BB. Since no duty was legally payable in the present case, the amount continued to remain a deposit retained without authority of law. Consequently, interest must be paid from the actual date of deposit till the date of refund - The impugned order is set aside and interest is directed to be calculated from the respective dates of deposit of the excess amount till the date of actual refund – The appeal is allowed - Refund of Revenue Deposits - Rate of Interest - Whether the assessee is entitled to interest at 12% per annum instead of 6% per annum on refund of amounts deposited under protest during investigation and adjudication proceedings – HELD - Since the amount does not partake the character of duty, the statutory provisions governing refund of duty under sections 11B and 11BB cease to have application. The Central Excise Act contains no specific provision prescribing the rate of interest payable on refund of revenue deposits, and therefore the rate has been consistently determined by judicial precedents based on principles of equity, fairness and reasonableness. The statutory rate of 6% prescribed under notification No.67/2003-C.E. (N.T.) is wholly inapplicable to revenue deposits - The impugned order is set aside and the revenue is directed to recalculate interest at 12% per annum from the respective dates of deposit till the date of actual refund, after adjusting the amount already paid, with the balance to be disbursed within 60 days.
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