Revenue deposits attract 12% interest until refund or conversion into statutory pre-deposit.

During October 2007 to September 2015, a dispute arose over the Appellant’s eligibility to claim CENVAT credit on items including welding electrodes and iron and steel.

After the welding-electrode issue was resolved in the Appellant’s favour by the Supreme Court, the Appellant sought refunds of amounts deposited during investigation/adjudication.

The Assistant Commissioner sanctioned a refund of ₹12,45,596, treated ₹4,93,345 as a pre-deposit and granted interest at 6% on that sum from the date it was treated as a pre-deposit; no interest was granted on ₹7,52,249.

The Commissioner (Appeals) rejected the Appellant’s challenge to the interest determination.

The Appellant appealed to the Tribunal seeking 12% interest on ₹7,52,249 from deposit to refund and on ₹4,93,345 for the period before it was treated as a pre-deposit

1. Whether the Appellant was entitled to interest on ₹7,52,249 from the date of deposit to the date of refund

2. Whether the Appellant was entitled to interest on ₹4,93,345 from the date of deposit until it was treated as a pre-deposit

3. Whether interest was payable at 12%

Section 11B of the Central Excise Act, 1944 concerns claims for refund of duty and related interest, while Section 11BB provides for interest on delayed refunds of duty after the statutory period.

The Tribunal relied on M/s Parle Agro Pvt. Ltd. v. Commissioner, Central Goods & Service Tax, Noida, 2022 (380) E.L.T. 219 (Tri.-All.), as affirmed by the Allahabad High Court in Principal Commissioner, Central GST v. M/s Parle Agro Pvt. Ltd., Central Excise Appeal No. 18 of 2021 (14 November 2025): where the amount is a revenue deposit rather than duty, Section 11B does not govern its refund, and the Act prescribes no interest rate for refund of such a deposit.

The Tribunal applied the principle that interest at 12% per annum may be awarded on revenue deposits, relying on Parle Agro and Kuil Fireworks Industries v. CCE, 1997 (95) E.L.T. 3 (S.C.).

The Tribunal found that the amounts had not been appropriated by the lower authorities towards duty.

Accordingly, ₹7,52,249 remained a revenue deposit until refund, and ₹4,93,345 remained a revenue deposit until it was treated as a pre-deposit under Section 35F.

Applying Parle Agro, the Tribunal held that the absence of a prescribed statutory interest rate for refund of revenue deposits did not prevent an award of interest at 12%.

It therefore distinguished the periods during which the sums retained their character as revenue deposits from the later period for which interest on the pre-deposit had already been granted.

It set aside the Order-in-Appeal and allowed the appeal with consequential relief as per law.