Tribunal rules in favor of appellant, directs Revenue to refund encashed amount.

The Tribunal ruled in favor of the appellant, stating that the Revenue's encashment of the bank guarantee for interest payment was contrary to the Settlement Commission's orders. The Tribunal partially allowed the appeal, directing the Revenue to refund the encashed amount to the appellant.

---

---

Issues:
1. Settlement Commission's order for adjustment of interest against excess duty paid.
2. Revenue's encashment of bank guarantee for interest payment.
3. Refund of encashed bank guarantee and voluntary interest payment.

Issue 1: The Settlement Commission's order directed the appellant to pay interest on the belated payment of duty to the extent of Rs. 4,07,779. However, due to a typographical error, the correct interest amount was Rs. 17,31,711. The Commission rectified the error and ordered the interest to be adjusted against the excess duty paid by the appellant. The appellant agreed to this adjustment, and the balance amount, if any, was to be refunded within 30 days.

Issue 2: The Revenue encashed the bank guarantee of Rs. 1,08,726 to recover the interest amount, which was given by the appellant during the investigation. The appellant requested a refund of the encashed amount and the voluntary payment of interest, but both the original and first appellate authorities rejected the request.

Issue 3: The appellant argued that since the Settlement Commission's order was final and unchallenged by the Revenue, the interest amount should have been adjusted against the excess duty paid through Cenvat credit. Therefore, the Revenue was not authorized to encash the bank guarantee. The appellant sought a refund of the encashed amount. The Revenue contended that there is no provision in the law for a cash refund of Cenvat credit or its adjustment against interest liability, citing relevant case laws.

The final decision by the Tribunal was in favor of the appellant, stating that the encashment of the bank guarantee by the Revenue was contrary to the Settlement Commission's orders. The Tribunal partially allowed the appeal, directing the Revenue to refund the encashed amount to the appellant.

---