Interest on revenue deposit refunds runs from date of deposit and equitable rate may be awarded on absence of statutory rate.

Amount paid under protest during investigation before adjudication is a revenue deposit, not duty; therefore statutory refund rules for duty do not govern commencement of interest and interest on refund must run from date of deposit. In absence of any statutory rate for interest on revenue-deposit refunds, courts may apply equitable judicial rates; accordingly a 12% per annum rate was applied from date of deposit until actual refund, subject to adjustment for any interest already sanctioned.

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Issues: (i) Whether interest on the refunded amount is payable from the date of deposit or from the date immediately after the expiry of three months from filing the refund application; (ii) Whether interest at 12% per annum is payable instead of 6% per annum.

Issue (i): Whether interest commences from date of deposit or from the date after three months from filing the refund application.

Analysis: The question depends on whether the refunded amount is a "duty" within Section 11B/11BB of the Central Excise Act, 1944 or a revenue deposit. Section 11BB prescribes interest on delayed refunds of duty from the date after three months from receipt of the refund application. Where an amount was paid under protest during investigation and prior to any adjudication or quantified demand, it does not acquire the character of "duty" and remains a deposit. Judicial precedents and binding High Court authority have held that Sections 11B/11BB apply only to refunds of duty and not to refunds of revenue deposits; therefore the commencement rule in Section 11BB cannot be imported into cases of revenue deposits.

Conclusion: Issue (i) is answered in favour of the appellant; interest is payable from the date of deposit because the refunded amount is a revenue deposit and not "duty" under Section 11B/11BB.

Issue (ii): Whether interest at 12% per annum is payable instead of 6% per annum.

Analysis: There is no statutory rate prescribed for interest on refund of revenue deposits under the Central Excise Act. In absence of a statutory prescription, judicial practice and principles of equity govern the rate. Tribunal precedent, affirmed by the Hon'ble High Court, has awarded 12% per annum on refunds of revenue deposits as appropriate where no statutory rate is provided and where amounts were retained without lawful authority.

Conclusion: Issue (ii) is answered in favour of the appellant; interest at 12% per annum is payable on the refunded amount from the date of deposit until actual refund, with adjustment for interest already sanctioned.

Final Conclusion: The impugned appellate order denying interest from the date of deposit and awarding interest at 6% per annum is set aside; the matter is resolved by treating the refund as that of a revenue deposit, with interest awarded at 12% per annum from date of deposit until actual payment, and consequential reliefs directed to be given by the authority.

Ratio Decidendi: Where an amount is paid under protest during investigation and prior to any adjudication or quantified demand, it is a revenue deposit and not "duty" under Section 11B/11BB of the Central Excise Act, 1944; consequently Sections 11B/11BB do not govern commencement or rate of interest for such refunds and judicially determined interest (12% per annum) may be awarded in the absence of a statutory rate.

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