2009 (12) TMI 931 - AT - Central Excise

Entitlement to interest - whether the interest on delayed refund is to be paid to the party immediately after expiry of three months from the date of receipt of the application of refund u/s 11B and 11BB of CEA, 1944? - Held that - the assessee is entitled for refund claim within three months from the date of application of refund claim and if there is any subsequent litigation, that does not bar the assessee to claim the interest from date of expiry of three months of the filing of the refund claim - appeal rejected - decided against Revenue.

Summary

Issues:
1. Whether interest on delayed refund is to be paid immediately after three months from the date of refund application under Section 11B and 11BB of Central Excise Act, 1944.

Analysis:
The judgment dealt with six appeals, three filed by the Revenue and three by M/s. Kirloskar Ferrous Industries Ltd., focusing on the issue of interest payment on delayed refunds. The provisions of Section 11BB regarding interest on delayed refunds were examined. Section 11BB stipulates that if duty ordered to be refunded is not repaid within three months from the receipt of the refund application, interest must be paid to the applicant. The interest rate is not to be below five percent and not exceeding thirty percent per annum. The judgment highlighted that the Hon'ble Bombay High Court had previously ruled against the Revenue, affirming the entitlement of the assessee to claim a refund within three months of the refund application, irrespective of subsequent litigation. The advocate cited precedents supporting the assessee's entitlement to interest on delayed payments after the three-month period, reinforcing the decision in favor of the assessee.

The advocate referenced various cases, including Jayant Glass Ltd., J.K. Cement Works, and Rama Vision Ltd., upheld by the Hon'ble Supreme Court, to support the contention that the assessee deserves interest on delayed payments after three months of the refund claim filing. Additionally, the advocate pointed out that the Hon'ble Supreme Court's ruling in the case of CCE, Hyderabad vs. I.T.C. further supported the assessee's position. The Department's argument, based on a Tribunal order in the case of CCE, Pune III vs. Ballarpur Industries Ltd., was dismissed as the Hon'ble Bombay High Court had already ruled in favor of the assessee. It was noted that the Department's timely refund payment within three months from the settlement of the dispute did not negate the assessee's right to claim interest from the expiry of the three-month period post the refund claim filing.

In conclusion, the judgment rejected the appeals filed by the Revenue and allowed the appeals filed by M/s. Kirloskar Ferrous Industries Ltd., granting consequential relief. The Cross Objection was also disposed of accordingly, affirming the assessee's entitlement to interest on delayed refunds as per the provisions of Section 11BB of the Central Excise Act, 1944.