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of <h1>Interest on confirmed excise duty demand where downstream Cenvat credit makes transaction revenue-neutral; interest denied, refund barred u/s11B.</h1> The dominant issue was whether interest was payable on a confirmed duty demand in a revenue-neutral situation. The Tribunal held that where duty paid by ... Liability of appellant to pay interest on the confirmed duty demand (refund claim) - revenue neutrality - HELD THAT:- In the present case, the Tribunal has recorded a clear finding that the situation is revenue-neutral, inasmuch as the duty paid by the assessee was available as Cenvat credit to its downstream units and there is no net loss of revenue to the exchequer. Thus, the Tribunal’s view that levy of interest would be unwarranted and purely compensatory interest cannot be insisted upon when there is, in substance, no pecuniary prejudice to the revenue. The Tribunal also found that the assessee was not entitled to refund of the duty already paid, having regard to the finality of the order-in-original and the statutory scheme of Section 11B. This Court is not satisfied that the Tribunal has committed any jurisdictional error or perversity warranting interference in appeal. No substantial question of law arises from the appeal - Appeal disposed off. Issues: (i) Whether interest under Section 11AB is payable by the assessee on the confirmed duty demand when the situation is revenue-neutral; (ii) Whether the assessee is entitled to refund of the duty already paid in view of valuation of clearances to job workers and finality of the order-in-original.Issue (i): Whether interest under Section 11AB must be levied despite finding of revenue neutrality and availability of Cenvat credit to downstream units.Analysis: The Tribunal on remand found that the duty paid by the assessee was available as Cenvat credit to downstream units such that there was no net loss to the exchequer, recording a revenue-neutral situation. The limited question was whether statutory interest should nonetheless be insisted upon where there is, in substance, no pecuniary prejudice to revenue. The High Court examined the Tribunal's finding of revenue neutrality and its application to the question of interest, and concluded there was no jurisdictional error or perversity in the Tribunal's approach.Conclusion: Interest under Section 11AB is not payable in the present case; this conclusion is in favour of the assessee.Issue (ii): Whether the assessee is entitled to refund of the duty already paid given the valuation adopted for clearances to job workers and the finality of the order-in-original.Analysis: The Tribunal rejected the refund claim having regard to the finality of the order-in-original and the statutory scheme governing refunds. The High Court found no error in the Tribunal's rejection of the refund, noting that the duty demand had attained finality and that the procedural and statutory framework did not permit indirect challenge to the confirmed demand through refund proceedings.Conclusion: The assessee is not entitled to refund of the duty already paid; this conclusion is against the assessee's refund claim.Final Conclusion: The appeal is dismissed; the Tribunal's conclusions that interest need not be levied in view of revenue neutrality and that the refund claim is not maintainable are upheld.Ratio Decidendi: Where a confirmed duty demand has been paid but the factual situation is revenue-neutral because the duty was available as credit to downstream units leaving no net loss to the exchequer, the imposition of compensatory interest under Section 11AB may be unwarranted; however, a refund claim may be barred by the finality of the adjudication under the statutory refund scheme.
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