ORDER
Moheb Ali M., Member (T)
1. This appeal is filed by the Revenue against the order of Commissioner (Appeals).
2. Briefly the facts are that the respondents manufacture bulk drugs/chemicals falling under Chapter No. 28 & 29 of CETA 1985. It all started with the denial of Modvat credit of Rs. 3,24,990/- by the Assistant Commissioner. The matter travelled upto the Tribunal. The Tribunal vide its Order No. C-I/900/2002-WZB, dated 26-3-2002 set aside the order of the lower appellate authority except to the extent of Rs. 2623/-. The appellant claimed the consequential refund. It was sanctioned. The appellant thereupon claimed refund of interest on the amount paid by him. This was denied by the lower original authority. In appeal, the Commissioner (A) held that the claim for refund of interest has to be sanctioned. He set aside the lower authority’s order. Now the Revenue is in appeal against the Commissioner (Appeals) order.
3. The Revenue’s grounds are that the respondents should not have paid the interest by debiting RG 23-A Part-II as such account was available only to debit the duty payable on the final goods; that as per Section 11B of the Central Excise Act, 1944, only duty excess paid can be refunded; that there is no provisions to refund interest amount under Section 11B of Central Excise Act; that the claim in any case is time barred as the appellant has not followed the procedure laid down in Rule 233B of Central Excise Rule.
4. None appeared for the respondents.
5. As per the first contention of the Revenue that the respondents should not have paid the interest demanded through RG 23A Part-II. I observe that when the respondents actually did so no objection was raised. It is only when a claim for refund of interest is made the Revenue argues that debiting the interest in RG 23A Part-II is not correct. The Commissioner (Appeals) rightly held that the department cannot take such a stand when it came to refund of the amount due to the assessee. In regard to the question whether Section 11B covers interest element I observe that the refund became due as a consequence of Tribunal’s order. Section 11B covers only; duty but the Department is obliged to refund even fines and penalties when an order imposing fines and penalties are set aside by a higher judicial forum. In the present case the department is obliged to refund an amounts paid by an assessee when he succeeds in appeal. The specious ground that Section 11B does not cover refund of interest is not available to the department. The Commissioner (A) rightly held that even the interest paid in pursuance of a demand is refundable. The Commissioner (Appeals) order has to be upheld in view of these observations. The appeal is rejected.