The Hon’ble CESTAT, Mumbai in case of SKODA AUTO INDIA PVT LTD Versus Commissioner of Central Excise, AURANGABAD (2012) 28 taxmann.com 58 (Mum. – CESTAT) in Order No.-A/382/2012-WZB/C-I(CSTB), dated 5 June 2012, held that the refund of interest paid on delayed payment of service tax, which is not liable to pay , shall not allowed if the liability of service tax has been admitted.

In this case, appellant has paid service tax and interest payable thereon during the pendency of show cause notice issued for demand of service tax under category of ‘Intellectual Property Right’ being import of goods. However, service receiver was not liable to pay service tax under rule 2(I)(d)(iv) prior to 18-4-2006 as held by of Hon’ble High Court Bombay in ,2008 in case of INDIA NATIONAL SHIPOWNERS ASSSOCIATION VS UNION OF INDIA. Therefore, the appellant was entitled to take the refund from 11-12-2008 but the appellant did not claim the refund of the service tax paid as the credit of the same has already been taken. Once the appellant had admitted their liability of service tax, the same should be paid along with interest; therefore refund claim of interest is not maintainable.