Interest of refund on penalty is not admissible under Section 11BB

Bundy India Limited Vs C.C.E. & S.T. (CESTAT Ahmedabad)

Hon’ble Apex Court in the case of CORONATION SPINNING INDIA (Supra) has held that interest of refund on penalty is not admissible under Section 11BB.   As a result I do not find the appellants are entitled to any refund of interest on penalty amount under Section 11BB. As regard, the appellant’s contention that the revenue cannot recover the same, as no demand show cause notice has been issued. I find that the said issue cannot be decided in the present proceedings.

FULL TEXT OF THE CESTAT JUDGEMENT

This appeal has been filed by the M/s. Bundy India Limited against denial of interest on the penalty refunded to the appellant.

2. Learned Counsel Mr. Vivek Bapat, appeared for the appellant. He argued that the appellant were entitled to refund of penalty but the claim of refund was rejected by the original adjudicating authority. They challenged the order of the original adjudicating authority before Commissioner (Appeals), who set aside the said order rejecting the refund claim and remanded the He argued that while remanding the matter, in para 5.4 of the order, Commissioner (Appeals) had directed refund of penalty along with interest. He argued that in the remand proceedings the adjudicating authority sanctioned the refund and interest to the appellant. The Revenue challenged the sanctioned order before Commissioner (Appeals) in respect of the interest sanctioned. The Commissioner (appeals) set aside the order of the original Adjudicating Authority again. Aggrieved by the said order the appellant before the Tribunal. Learned Counsel argued that in para 5.4 of the remand order of the Commissioner (Appeal) dated 03.07.2017, the Commissioner (Appeals) had directed refund of penalty along with interest. The said order of the Commissioner (Appeals) was accepted by the revenue and therefore his observation become final and therefore refund has to be granted along with interest. He further argued that the revenue has not raised any demand show cause notice consequent to the sanctioned of refund. As a result the amount sought to be recovered cannot be recovered by the revenue.

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