2004 (4) TMI 493 - AT - Central Excise

Summary

Issues:
1. Refund claim by M/s. Steel Strips Ltd. for duty paid on cold rolling activity.
2. Eligibility of M/s. Steel Strips Ltd. for interest on the refunded amount.
3. Interpretation of Section 11BB of the Central Excise Act regarding payment of interest on delayed refunds.
4. Admissibility of interest by the Revenue on the refunded amount.

Issue 1: Refund claim by M/s. Steel Strips Ltd.
The case involved a refund claim by M/s. Steel Strips Ltd. for duty paid on cold rolling activity, contending that the process did not amount to manufacture. The matter was resolved by the Supreme Court, which ruled in favor of M/s. Steel Strips Ltd. The Assistant Commissioner initially rejected the refund claim, but the Tribunal remanded the case. The Deputy Commissioner later approved the refund claim but denied interest, citing Section 11BB of the Central Excise Act. The Commissioner (Appeals) ordered interest to be paid to M/s. Steel Strips Ltd. from a specified date.

Issue 2: Eligibility of M/s. Steel Strips Ltd. for interest on the refunded amount
M/s. Steel Strips Ltd. argued that they were entitled to interest from an earlier date as the deposited amount was without legal authority. They cited precedents where interest was granted in similar situations. The Commissioner (Appeals) agreed that interest should be paid to M/s. Steel Strips Ltd. due to delays in processing their refund claim.

Issue 3: Interpretation of Section 11BB of the Central Excise Act
The Revenue contended that interest was not payable as the Tribunal's remand order did not constitute an order under Section 11BB. They referred to the Explanation to Section 11BB, stating that interest is applicable only after a decision on the refund case. Precedents were cited to support the argument that interest on delayed refunds is only payable from the date of the final order in favor of the assessee.

Issue 4: Admissibility of interest by the Revenue on the refunded amount
The Tribunal clarified that Section 11BB of the Central Excise Act mandates interest payment if a refund is not sanctioned within three months. The Supreme Court's ruling in a related case emphasized that interest rights on delayed refunds were introduced in 1995. The Tribunal rejected the appeals from both M/s. Steel Strips Ltd. and the Revenue, affirming the Commissioner (Appeals)' decision to grant interest to M/s. Steel Strips Ltd. due to delays caused by the Revenue in processing the refund claim.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal provisions, and the final decision rendered by the Tribunal.