2002 (4) TMI 862 - Commissioner - Central Excise

Summary

Issues:
- Eligibility of the appellants to interest on delayed payment of refund claims.

Analysis:
1. The judgment involves two appeals concerning the eligibility of the appellants to interest on delayed payment of refund claims under Section 11B of the Central Excise Act, 1944. The first appeal pertains to a refund claim of Rs. 36,395/- sanctioned by the Dy. Commissioner, while the second appeal involves a refund claim of Rs. 2,65,370/- adjusted against confirmed demand/arrears. Both appellants filed appeals claiming interest for the delay in refunding the amounts.

2. The appellants contended that the adjudicating authority did not consider Section 11BB provisions while sanctioning the refunds, resulting in interest remaining unpaid. They argued for interest amounts based on specific periods, citing relevant case law to support their claims.

3. During the hearing, the appellants emphasized the delay in sanctioning the refund claims and the absence of any mention of interest in the impugned orders. They referenced various case laws to support their argument for interest on delayed refund payments.

4. The Commissioner examined the provisions of Section 11B and 11BB of the Central Excise Act, 1944. Section 11BB provides for interest on delayed refunds, specifying the rate and period for which interest is payable. The Commissioner highlighted the importance of timely refund processing and interest payment as mandated by the law.

5. To clarify any doubts, the Central Board of Excise and Customs (CBEC) issued Circular No. 130/41/95-CX, emphasizing the payment of interest on refunds not processed within three months of the application receipt. The circular provided detailed instructions on the calculation and payment of interest on delayed refunds, aligning with the legal provisions.

6. Citing the CBEC circular and relevant case laws, the Commissioner affirmed that interest on delayed refund payments should be calculated from three months after the submission of the refund claim. The Commissioner referenced a Government of India order in support of this position, emphasizing the obligation to pay interest on delayed refunds.

7. The Commissioner further supported the decision by highlighting previous judgments where courts ordered interest on delayed refunds even before the insertion of Section 11BB in the Central Excise Act, 1944. The Commissioner emphasized the legal precedence and the responsibility to ensure timely refund processing with interest where applicable.

8. Consequently, the Commissioner ruled in favor of both appellants, determining that they were entitled to interest on the delayed payment of refund claims as per the provisions of Section 11BB. The interest amounts were calculated based on the specified periods for each refund claim, ensuring compliance with the legal requirements for interest payment on delayed refunds.