2009 (4) TMI 644 - AT - Central Excise

Refund of interest - Order of Commissioner (Appeals) - Scope of SCN - Held that - if any amount has been wrongly collected the department cannot refuse refund thereof on the ground that it is not provided in the statutory provisions for refund, and that if interest is collected even when it is not to be recovered it is required to be refunded - refund of interest is admissible to the appellants - matter remanded to the adjudicating authority for deciding as to whether the claim is hit by unjust enrichment.

Summary

Issues:
Claim for refund of interest under Section 11B of the Central Excise Act.

Analysis:
The case involved the rejection of the appellant's claim for a refund of interest amounting to Rs. 44,551. The show-cause notice proposed rejection on the basis that the claim did not fall under the purview of Section 11B of the Central Excise Act. The adjudication order upheld this rejection, stating that Section 11B only pertains to the refund of duty, not interest. The Commissioner (Appeals) also rejected the claim, citing that the appellants had wrongly taken credit and were liable to pay interest for the delay in reversing the credit. The rejection was based on the ground that the claim for refund of interest was not covered under Section 11B.

Upon review, it was noted that the sole ground for rejection in the show-cause notice was the inapplicability of Section 11B to the claim for interest refund. The lower appellate authority erred in rejecting the claim on different grounds, such as the merits of the case. The Tribunal referred to a previous case where it was held that if an amount is wrongly collected, the department cannot deny a refund based on the absence of specific provisions for such refunds. It was emphasized that if interest is collected erroneously, it must be refunded. Consequently, the Tribunal remanded the case to the adjudicating authority to determine if the claim was affected by unjust enrichment. The decision to allow the appeal was made in light of the above reasoning, with instructions for fresh orders after granting the appellants a reasonable opportunity to be heard.

In conclusion, the judgment addressed the issue of refund of interest under Section 11B of the Central Excise Act, emphasizing that if interest is collected erroneously, it must be refunded, regardless of specific statutory provisions. The decision to remand the case for further consideration on the unjust enrichment aspect was made to ensure a fair and thorough examination of the claim.