2009 (11) TMI 763 - AT - Central Excise

Interest on delayed refund - Held that - there is no authorization by the Commission (sic) of Commissioner for filing appeal to Tribunal against the Commissioner (Appeals) s order and there is no explanation in this regard from the learned DR. Therefore, on this very ground this appeal is liable to be dismissed. Just because while payment of refund, in addition to confirmed duty demands, some penalty and interest were also adjusted which were subsequently set aside, the amount adjusted towards penalty and interest would not become penalty and interest and on setting aside of the order of penalty and interest, the interest on the refund, which was payable to the respondent cannot be denied. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund claim adjustment against demands pending before Commissioner (Appeals)
2. Denial of interest on the adjusted refund amount
3. Authorization for filing appeal to Tribunal
4. Correctness of refund issuance and interest payment

Analysis:
1. The case involves a dispute over a refund claim adjustment against pending demands before the Commissioner (Appeals). The respondent filed a refund claim of Rs. 1,05,73,237, out of which only Rs. 18,38,918 was paid initially as the rest was adjusted against confirmed demands of duty, interest, and penalty. However, the appeals against these demands were subsequently allowed, making the adjusted amounts refundable. The issue was whether the interest on the refund amount should be paid for the delay in payment after the demands were set aside.

2. The Revenue contended that interest was not payable on the adjusted amount representing penalty and interest, as per the Central Excise Act. The Commissioner (Appeals) disagreed, stating that once the penalty and interest orders were vacated, the adjusted amount became duty only, making the interest payable. The respondent argued that interest should be paid from the date immediately after three months from the filing of the claim. The Tribunal upheld the Commissioner (Appeals)'s decision, allowing interest from 14-7-04 till the date of payment.

3. The Tribunal noted the lack of authorization by the Commissioner for filing the appeal against the Commissioner (Appeals)'s order. This procedural deficiency could have led to the dismissal of the appeal. However, since the Tribunal found merit in the case on the issue of interest payment, the appeal was dismissed primarily on the grounds of interest payment rather than the lack of authorization.

4. The Tribunal found that the initial refund issuance for only Rs. 18,38,918, deducting the amount against pending demands, was incorrect. The interest on the refund amount, which should have been paid in full initially, could not be denied due to the subsequent setting aside of the demands. Therefore, the Commissioner (Appeals)'s decision to allow interest from 14-7-04 was upheld, and the Revenue's appeal was dismissed based on the correctness of the interest payment decision.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive understanding of the case and the Tribunal's decision.