2005 (5) TMI 397 - AT - Central Excise

Summary

Issues:
1. Claim for interest on delayed refund of Modvat credit amount under Section 11BB of the C.E. Act, 1944.

Analysis:
The appellants had initially taken Modvat credit on certain capital goods received in their factory in 1995, which was later disallowed by the Department. However, the appellate authority allowed the Modvat credit to the assessee in an order dated 21-2-97. Subsequently, the appellants re-credited the amount in their Cenvat Account on 20-3-2002 and filed a claim for refund of interest on the credit amount. Both the original authority and the first appellate authority held that there was no provision in law for the payment of such interest, leading to the present appeal.

Upon hearing both sides, the learned Counsel for the appellants relied on a Tribunal decision and argued that interest should be paid on the delayed refund of Modvat credit amount under Section 11BB of the C.E. Act, 1944. On the other hand, the learned JDR sought to distinguish the cited case, emphasizing that the current situation was not a case of delayed refund but delayed availment of credit. The learned JDR contested the arguments based on the proviso to sub-section (2) of Section 11B.

After careful consideration, the judge found that the Modvat credit had been allowed by the Commissioner (Appeals) in 1997, and it was the choice of the assessee not to avail the credit until 2002. The judge concluded that the delay was due to delayed availment of credit by the assessee and not a delayed grant of Modvat credit by the Department. Therefore, the judge held that the assessee was not entitled to claim interest on the credit amount from the Department. The judge also noted that the case law cited by the learned Counsel was not applicable to the facts of this case, as it involved a different scenario of delayed refund.

In light of the above findings, the judge rejected the appeal, stating that the impugned order could not be interfered with based on the circumstances presented during the hearing. The judgment was dictated and pronounced in open court, bringing the matter to a close.