Manufacturer entitled to interest on duty refund under protest, Tribunal rules

The Tribunal held in favor of the appellant, a manufacturer facing a duty dispute with the Revenue, regarding entitlement to interest on a delayed refund claim. The Tribunal determined that the appellant, who paid duty under protest and later received a refund without interest, was entitled to interest from the date of deposit till realization at a rate of 12% per annum. Citing decisions from various High Courts, the Tribunal set aside the initial order and allowed the appeal, emphasizing that amounts paid under protest should be refunded with interest.

---

---

Issues involved:
Claim for interest on refund from date of deposit till realization.

Analysis:
The appellant, a manufacturer of various ingots using scrap as raw material, faced a dispute with the Revenue regarding the liability to pay duty on certain products. The appellant paid an amount under protest during 2008-09 and 2009-10 to avoid interest liability. Subsequently, based on a circular by CBEC, it was determined that no duty was payable on certain products. The appellant filed a refund claim in 2016, which was sanctioned in 2019 without interest from the date of deposit. The appellant contended they were entitled to interest on the delayed refund.

The appellant relied on various court decisions to support their claim for interest, while the Revenue argued that the duty was paid under protest and the issue was sub-judice. The Revenue contended that the duty demand deposited under protest became due due to a circular, and any claim for refund due to misinterpretation must be made within the prescribed period under the Central Excise Act. The Revenue cited several case laws to support their argument.

After hearing both parties, the Tribunal noted that the appellant paid the duty under protest believing it to be liable, and the subsequent refund was delayed without interest. The Tribunal held that the appellant was entitled to interest on the delayed refund from the date of deposit till realization at the rate of 12% per annum. The Tribunal set aside the impugned order and allowed the appeal.

The Tribunal referenced decisions by the Allahabad High Court, Gujarat High Court, and Madras High Court, which supported the principle that any amount deposited under protest during adjudication proceedings should be refunded with interest, as the Revenue has no authority to retain such amounts. Based on this principle, the Tribunal concluded in favor of the appellant's entitlement to interest on the delayed refund.

---