CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL MUMBAI WEST ZONAL BENCH EXCISE APPEAL No.86716 OF 2021 [Arising out of Order-in-Appeal No.PUN-EXCUS-001-APP-315/2020-21 dated

31.03.2021 passed by the Commissioner (Appeals-I), Central Tax, Pune-411001]

KBK CHEM ENGINEERING PVT LTD Gat No.540,At Post-Kasar Amoboli, Urawade Road, Mulshi, Appellant Pune-412 115 Vs.

DEPUTY COMMISSIONER, CENTRAL TAX, DIVISION-II, PIMPRI, PUNE-I COMMISSIONERATE, Respondent PUNE-411044 Appearance:

Present for the Appellant: Shri Rahul Patil, Company Representative Present for the Respondent:Shri C.S.Vinod (AR)

CORAM:

HON'BLE MR. AJAY SHARMA, MEMBER ( JUDICIAL )

FINAL ORDER NO.85869/2025 Date of Hearing: 11.03.2025 Date of Decision:05.06.2025 PER:AJAY SHARMA This appeal has been filed against the impugned Order-in-

Appeal dated 31.3.2021 passed by the Commissioner (Appeals-1) Central Tax, Pune whereby the learned Commissioner rejected the appeal filed by the appellant by upholding the Order-in-Original dated 22.9.2020 passed by the Deputy Commissioner, Central GST, Division-II (Pimpri) of Pune Commissionerate rejecting the claim of interest on refund.

2. The issue involved herein is whether appellant is entitled to interest on refund amount when the refund was sanctioned within two months of the filing the refund application?

3. The appellant is engaged in undertaking turnkey projects as well as manufacturing activity. During the course of investigation into the activities of the appellant in the year 2006 regarding undervaluation etc. the appellant deposited Rs. 16 lakhs [Rs.6 lakhs on 21.6.2006 through CENVAT reversal + Rs. 10 lakhs in cash on 1.7.2006]. Show cause notice dated 21.11.2008 alleging undervaluation and demanding short payment of duty was issued. Though the initial Adjudication Order and thereafter the order of 1^st appellate authority went against the appellant, finally this Tribunal vide order dated 22.11.2019 decided the issue in favour of the appellant. Pursuant to the said order, the appellant filed the refund claim on 1.8.2020 for refund of Rs. 16 lakhs deposited by them during investigation. The same was sanctioned by the refund sanctioning authority vide order dated 22.9.2020 i.e. within two months. However no interest was granted on the refund amount. Aggrieved, the appellant preferred appeal before the learned Commissioner (Appeals) for grant of interest but the same was rejected by learned Commissioner.

4. Learned Company Representative appearing on behalf of the appellant submits that any amount deposited during investigation or during the pendency of adjudication proceedings was in the nature of a deposit under protest and not as payment of duty. Since the interest is compensatory in nature as the appellant has been wrongfully deprived of the use of that money therefore they are entitled for interest on it from the date of deposit till the date of refund. According to learned company representative, the department insisted the appellant to pay the amount of Rs.16 lakhs during investigation and therefore interest cannot be denied on that amount from the date of deposit i.e. June-July, 2006. In support of his submissions, learned Company representative cited a number of decisions including Sandvik Asia Ltd. Vs. CIT; 2006(196) ELT 257(SC), Ranbaxy Laboratories Ltd. Vs. UOI; 2011-TIOL-SC-CX and Kull Fire Works vs.

CCE; 1997(95)ELT 3 (SC).

5. Per contra learned Authorised Representative appearing on behalf of Revenue reiterated the findings recorded in the impugned order and prayed for dismissal of appeal filed by the appellant. According to learned Authorised Representative the amount paid by the appellant during investigation is towards payment of duty only and is liable to be refunded only as per the provisions of Section 11B of Central Excise Act, 1944 and the interest, if any payable, is governed strictly by Section 11BB ibid. In support of his submissions learned Authorised Representative also cited few decisions including the law laid d