Amount deposited under mistaken notion doesn’t amount to duty hence interest eligible

Neha Power Tech (I) Pvt. Ltd Vs Commissioner of C.G.S.T. and Central Excise (CESTAT Kolkata)

CESTAT Kolkata held that amount deposited during the course of investigation is not voluntary payment but it was deposit made under mistaken notion and hence doesn’t amount to duty. Accordingly, interest is eligible on amount refunded.

Facts- 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. Thus, the 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. On the other hand, 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.

Conclusion- In the present case, the amount deposited during the course of investigation was not as a voluntary payment, but a deposit made under a mistaken notion as to their central excise duty liability, at the insistence of the Department, as specifically pointed out by the appellant, and thus, would not amount to ‘duty’. Thus, held that the appellant is eligible for interest on the said amount refunded, at the rate of 12% from the date of deposit during the course of investigation till the date of refund.