You have asked under which head the reimbursement of the penalty amount should be done. You may show it as arrears. This answers your question.
Nevertheless, the larger question is whether returning the fine that was imposed, is it a sound decision? The penalty is defined as someone is made to do to compensate for wrongdoing. If you return the amount it will dilute the impact of the punishment. Secondly, if you return the amount then the wrongdoers could recidivate as well.
You may think that the refund of the penalty is largeheartedness, however, it will send a message to the employees that the leadership is feeble-minded or fickle-minded. Employees are employees and should they stray from the path, leadership should come on them with a heavy hand. That message must remain with them forever.
If you show amount in arrears head then ESIC will impact for employee and employer so as per my suggestion,If you are not paying the incentive on monthly basis then show it in incentive head.
Definition of wages in ESIC for calculation purpose is "definition includes other additional remuneration, if any, paid at intervals not exceeding two months such allowances not to be consider for calculation purpose".