2006 (7) TMI 449 - AT - Central Excise

Summary

Issues involved:
1. Application for direction for payment of interest under section 11BB of the Central Excise Act, 1944.
2. Contempt of Tribunal by Revenue for not paying interest on refund.
3. Legality of issuing a show cause notice for recovery of refunded amount along with interest.

Analysis:

Issue 1: Application for direction for payment of interest under section 11BB of the Central Excise Act, 1944
The applicants filed a Miscellaneous application seeking direction for payment of interest under section 11BB of the Central Excise Act, 1944, following the Tribunal's Final Order No. 308/2005 dated 28-2-2005. The Tribunal had allowed the appeal, holding that the appellants were entitled to a refund claim of Rs. 60,77,177 as they had not passed on the duty incidence to any person. The jurisdictional authority granted the refund but did not pay the interest due under Section 11BB. The applicants requested the Department to grant interest, but instead, the Department issued a show cause notice for recovery of the refunded amount along with interest, citing an appeal filed by the Department against the Tribunal's order.

Issue 2: Contempt of Tribunal by Revenue for not paying interest on refund
The Tribunal noted that the interest due to the appellants under Section 11BB had not been paid by the Departmental authorities, despite the Tribunal's order. The Tribunal expressed concern over the Department's lack of understanding or implementation of Section 11BB, criticizing the competence of the authorities. The Tribunal highlighted the provisions of Section 11BB, emphasizing the obligation to pay interest on delayed refunds. The Department's action of not paying interest and issuing a show cause notice for recovery of the refund was deemed as contempt of the Tribunal and a subversion of the judicial process.

Issue 3: Legality of issuing a show cause notice for recovery of refunded amount along with interest
The show cause notice issued by the Department to recover the refunded amount along with interest was found to be unjustified by the Tribunal. The Tribunal considered the Revenue's action as a height of judicial indiscipline, especially since there was no stay obtained against the implementation of the Tribunal's order. The Tribunal directed the Department to pay the interest due to the party on the refund amount in accordance with Section 11BB within a week from the date of the order, disposing of the Miscellaneous application in favor of the appellants.

This judgment underscores the importance of complying with legal provisions for payment of interest on delayed refunds under the Central Excise Act, 1944 and highlights the consequences of not honoring Tribunal orders.