CESTAT Grants 12% Interest on Investigation Deposit from Deposit Date to Refund

Case Details: Hindustan Mint & Agro Products Pvt. Ltd. vs. Commissioner of Central Excise & CGST, Gautam Budh Nagar (2026) 39 Centax 154 (Tri.-All)

Judiciary and Counsel Details

• • Shri P.K. Choudhary, Member (J)
  • Shri Abhinav Kalra, Adv. for the Appellant.
  • Shri Santosh Kumar, Authorised Representative, for the Respondent.

Facts of the Case

The appellant-assessee, a manufacturer-exporter of mentha products, availed CENVAT credit on inputs procured from units located in Jammu & Kashmir operating under area-based exemption and claimed a rebate. An enquiry alleged that the appellant had availed credit without actual receipt of goods. In response, the appellant made a deposit during the investigation, which was done under protest. Four Show Cause Notices (SCNs) were issued to the appellant. These SCNs were subsequently quashed by the Punjab & Haryana High Court. Following the refund of the deposit without interest, the appellant contended that the amount paid was neither a duty nor a statutory pre-deposit. The appellant further sought interest at the rate of 12% per annum, from the date of deposit until the date of refund. The department, however, relied upon Sections 11B and 11BB of the Central Excise Act, 1944. The matter was then placed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

CESTAT Held

The CESTAT held that the amount deposited during the investigation was neither a duty nor a statutory pre-deposit under Sections 35F and 35FF of the Central Excise Act, 1944. It further observed that the statutory regimes under Sections 11B, 11BB, 35F, and 35FF of the Central Excise Act, 1944, did not govern the period for payment of interest on such deposits. The Tribunal noted that the deposit remained with the department without authority after the proceedings culminated in favour of the appellant. This amounted to illegal retention. Consequently, the Tribunal held that interest at 12% per annum was payable from the date of deposit until the date of refund. It also modified the order-in-appeal to that extent.

List of Cases Cited

• • Arihant Tiles and Marbles Pvt. Ltd. — MANU/CE/0346/2019 — Relied on [Paras 11, 13]
  • Ghaziabad Ship Breakers Pvt. Ltd. v. Commissioner — MANU/CS/ 0290/2010 — Relied on [Paras 11, 13]
  • Jai Bhawani Concast Pvt. Ltd. — Final Order No. 50919/2022 dated 27-9-2022 by CESTAT, New Delhi — Relied on [Paras 11, 13]
  • Marshall Foundry & Engg. (P) Ltd v. Commissioner — (2023) 4 Centax 254 (Tri. – Chan) — Relied on [Paras 11, 13]
  • Modern Threads India Ltd. — Final Order No. 55944/2024 dated 28-6-2024 by CESTAT, New Delhi — Relied on [Paras 12, 13]
  • Sandvik Asia Ltd. v. Commissioner — 2006 (196) E.L.T. 257 (S.C.) — Relied on [Paras 11, 13]
  • Sony Pictures Networks (P) Ltd v. — Union of India — 2017 (353) E.L.T. 179 (Ker) — Relied on [Paras 10, 13]

List of Notifications Cited

• • Notification No. 56/2002-C.E. dated 14-11-2002 [Para 2]