2006 (9) TMI 320 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to interest on the refund of pre-deposit.
2. Application of Section 11B and Section 11BB of the Central Excise Act, 1944.
3. Precedents and legal interpretations regarding interest on refunds.

Issue-wise Detailed Analysis:

1. Entitlement to Interest on the Refund of Pre-deposit:
The appellant sought interest on the refund of a pre-deposit amounting to Rs. 4,30,000/-, which was deposited on 15-10-1994 under Section 35F of the Central Excise Act, 1944. The Tribunal had allowed the appeal on 14-5-2003, entitling the appellant to a refund. The refund was sanctioned on 14-8-2003, within the prescribed three months. The appellant's claim for interest was denied by the Assistant Commissioner and upheld by the Commissioner (Appeals), stating that interest on pre-deposit was not mandated by the Act.

2. Application of Section 11B and Section 11BB of the Central Excise Act, 1944:
Refund claims are governed by Section 11B, which does not provide for interest on refunds. Section 11BB deals with interest on delayed refunds, stipulating that interest is payable if the refund is not made within three months from the date of receipt of the refund application. The Tribunal noted that the refund in this case was processed within three months, hence no interest was payable. The explanation to Section 11BB clarifies that orders by the Tribunal or courts for refunds are deemed orders under Section 11B(2) for the purposes of interest on delayed refunds.

3. Precedents and Legal Interpretations Regarding Interest on Refunds:
The appellant relied on several judgments and circulars to support the claim for interest:
- Kuil Fireworks Industries v. CCE: The Supreme Court awarded interest on a pre-deposit refund, but this was under the Court's plenary powers, not under statutory provisions.
- CCE, Hyderabad v. ITC Ltd.: The Supreme Court directed compliance with a draft circular for interest on pre-deposits, but this did not set a statutory precedent.
- Elephanta Oil and Vanaspati Industries Ltd. v. Union of India: The Delhi High Court awarded interest on a redemption fine, not directly applicable to pre-deposit refunds.
- Shree Ram Food Industries v. UOI: The Gujarat High Court awarded interest on excess duty payment, not directly relevant to pre-deposit refunds.
- Sheela Foam Pvt. Ltd. v. CCE: The Tribunal awarded interest from three months after the final order, aligning with Section 11BB.
- Padmanabh Silk Mills v. Union of India: The Gujarat High Court held that interest on delayed refunds is governed by Section 11BB, applicable only if the refund is delayed beyond three months.

Conclusion:
The Tribunal concluded that the appellant was not entitled to interest on the refund of the pre-deposit as the refund was processed within the stipulated three months. The provisions of Section 11BB, which govern interest on delayed refunds, were not applicable since there was no delay. The appeal was dismissed, affirming the decisions of the lower authorities.

Final Judgment:
The Tribunal dismissed the appeal, stating that there was no basis for awarding interest on the refund of the pre-deposit amount, as the refund was made within the prescribed period under Section 11BB of the Central Excise Act, 1944. The decision was pronounced in open court on 12-9-2006.