Deposits made during investigation at department's insistence under mistaken duty notion are not 'duty'; Section 11B inapplicable; refundable with 12% interest from deposit to refund date.

ORDER:

The appellant has filed this appeal against the non-payment of interest on the refund of Rs.20,00,000/- deposited by them, in the Order-in-Original No.10/Refund/AC/CGST&CX/TECH/ JPD/2024-25 dated 25.11.2024. The above Order-in-Original has been upheld by the Ld. Commissioner of C.G.S.T. & C.X., Kolkata Appeals-II, 3^rd& 4^th Floor, Bamboo Villa, 169, A.J.C. Bose Road, Kolkata – 700 014 vide the Order-in-Appeal No. 292/Haldia/CE/2025-26 dated 28.08.2025.

2. The appellant submits that during the course of investigation, they have deposited an amount of Rs.20,00,000/- at the insistence of the department. The Ld. Counsel appearing on behalf of the appellant has submitted that this Bench has already decided the above issue, in favour of the appellant, in the case of M/s. Harrisons Industries v. Commissioner of Commissioner of C.G.S.T. and Central Excise, Kolkata North [Final Order No. 76670 of 2025 dated 03.07.2025 in Service Tax Appeal No. 76006 of 2024 – CESTAT, Kolkata] wherein it has been held that interest is payable at the rate of 12% per annum from the date of deposit till the date of refund. The Ld. counsel further submitted that the said order was appealed by the Revenue before the Hon’ble High Court at Calcutta whereafter the Hon’ble High Court vide Order in CEXA/1/2026 and IA No. GA/1/2026 & anr. dated 20.02.2026 has dismissed the appeal filed by the Revenue by making the observation that there is no substantial question of law arising from the order of the Tribunal. Accordingly, the Hon'ble High Court has rejected the appeal filed by the Revenue. Thus, the Ld. Counsel for the appellant prayed for grant of interest at the rate of 12% on the amount refunded to them in terms of the ratio of the decisions cited supra.

3. On the other hand, the Ld. Authorized Representative of the Revenue contends that the appellant has voluntarily paid the said amount and hence, the same cannot be considered as a pre- deposit under Section 35F of the Central Excise Act, 1944. He relied on the decision in the case of M/s. Goldy Engineering Works v. Commissioner of Central Excise & anr. [2025 (4) TMI 1186 – SC] wherein the Hon’ble Supreme Court has not allowed interest in respect of an amount deposited during the course of investigation. He also cites the decision in the case of M/s. HGI Automotives Pvt. Ltd. v. Commissioner of C.Ex., G.S.T., Faridabad & ors. [2025 (6) TMI 439 – CESTAT, Chandigarh] in support of his contention, wherein the CESTAT, Chandigarh has relied on the decision of the Hon’ble High Court of Delhi in the case of M/s. Goldy Engineering Works v. Commissioner of Central Excise [(2023) 10 Centax 189 (Del.)], as affirmed by the Hon’ble Apex Court (supra), and taken the same view that interest is not payable on deposits made during investigation in terms of Section 35FF. Accordingly, he prayed for rejecting the appeal filed by the appellant.

4. Heard both sides and perused the records.

5. I find that in the present case, the appellant has deposited an amount of Rs.20,00,000/- during the course of investigation. The said amount was refunded to the appellant vide the Order-in-Original No. 10/Refund/AC/CGST&CX/TECH/JPD/2024-25 dated 25.11.2024. The ld. adjudicating authority, however, has not sanctioned interest on the said amount while sanctioning the refund, holding that the said amount was not a pre-deposit made in terms of Section 35F of the Central Excise Act, 1944. The same order has been upheld by the Ld. Commissioner (Appeals) vide the impugned order dated 28.