Revised Section 11AB applies to recover interest on refunded Additional Excise Duty (AED) post-amendment.

The Tribunal partly allowed the Revenue's appeal, applying the amended Section 11AB to recover interest on the erroneously refunded Additional Excise Duty (AED) for specific months. The Tribunal held that the liability to repay the refund arose after the amendment date, rejecting arguments against the applicability of the amended Section 11AB. The decision emphasized that the refund of AED falls within the scope of Section 11AB, dismissing contentions regarding the absence of a specific provision for interest recovery in the statute charging AED.

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Issues:
- Applicability of Section 11AB of the Central Excise Act on an erroneous refund of Additional Excise Duty (AED) granted to the respondent.
- Interpretation of amended Section 11AB(2) in relation to the recovery of interest on erroneous refunds.
- Consideration of judicial decisions and circulars in determining the liability for interest under Section 11AB.
- Dispute regarding the recovery of interest on the erroneous refund of AED granted to the respondent.

Analysis:

1. The case involved an appeal by the Revenue against an Order-in-Appeal setting aside an Order-in-Original and dropping the demand for interest on an erroneously refunded amount of AED under Section 11AB of the Central Excise Act. The respondent, a Public Sector Undertaking, was erroneously refunded AED and subsequently made good the entire amount in two tranches. The Revenue initiated proceedings for the recovery of interest under Section 11AB, which was confirmed by the adjudicating authority. However, the Commissioner (Appeals) allowed the appeal based on the non-applicability of Section 11AB due to the absence of intent to evade payment of duty.

2. The Revenue contended that the amended Section 11AB should apply to demand interest on the erroneously refunded amount, even though the adjudication orders were passed before the amendment. They argued that the recovery of the refund was covered by the amended Section 11AB and cited relevant tribunal decisions and circulars to support their position.

3. In response, the respondent argued that the erroneous refund was not due to any intent to evade and therefore, the pre-amended Section 11AB did not apply. They also highlighted that the amended Section 11AB(2) carves out exceptions and does not extend to cases where the duty had become payable before a specific date. They referenced judicial decisions and circulars to support their interpretation of the law.

4. After hearing both parties and examining the case records, the Tribunal concluded that the amended Section 11AB(1) should apply to the recovery of interest on the erroneous refund for the months of April and May 2001, as the liability to pay back the refund arose after the amendment date. The Tribunal rejected the Revenue's argument that the amended Section 11AB did not cover erroneous refunds, emphasizing that the refund of AED falls within the scope of Section 11AB. Additionally, the Tribunal dismissed the respondent's argument regarding the lack of a specific provision for the recovery of interest in the statute charging AED, stating that the provisions of the Central Excise Act apply mutatis mutandis in such cases.

5. Ultimately, the Tribunal partly allowed the appeal filed by the Revenue, modifying the Order-in-Appeal to reflect the application of the amended Section 11AB in recovering interest on the erroneous refund for specific months. The judgment was pronounced on 16 December 2021 by the members of the Appellate Tribunal CESTAT Kolkata.

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