2014 (7) TMI 1232 - AT - Central Excise

Interest on delayed refund - whether the respondent is entitled to get the interest for the period of delay in late sanction of the refund amount? - Held that - On a conjoint reading of Sections 11B and 11BB of the Act (discussed supra) it transpires that once an order is passed by the competent Central Excise authorities pursuant to the refund application filed by the applicant then the refund shall be paid forthwith within a period of three months; and if claimed amount is not paid within such stipulated time frame then under the statutory obligations the authorities are required to pay interest on the refund amount paid belatedly. The time limit for payment of the refund amount to the respondent by the Central Excise authorities (without interest) expired on 18-6-1998. Since claimed amount was finally paid to the respondent on 22-8-2005 the respondent is entitled for the statutory interest from 19-6-1998 to the date when the refund was eventually paid i.e. 22-8-2005 Appeal rejected - decided against Revenue.

Summary

Issues:
1. Entitlement to interest claim under Section 11BB of the Central Excise Act, 1944.
2. Calculation of interest period for delayed sanction of the refund amount.

Analysis:

Issue 1: Entitlement to Interest Claim
The appeal was filed by the Revenue against the order allowing interest claim under Section 11BB of the Central Excise Act, 1944 in favor of the respondent. The respondent had initially filed a refund application on 19-3-1998, which was rejected due to lack of evidence. After contesting in appellate forums, the appeal was eventually allowed on 31-3-2005, leading to a refund claim of &8377; 54,97,351/-. The Central Excise department sanctioned a partial refund on 22-8-2005, following which the respondent claimed interest of &8377; 22,82,401/- for the delayed refund. The original authority rejected the interest claim, but the Commissioner (Appeals) allowed it on 23-2-2007. The issue revolved around whether interest was payable for the period of delay in refund sanction.

Issue 2: Calculation of Interest Period
The statutory framework under Sections 11B and 11BB of the Act governs refund claims and interest payments on delayed refunds. Section 11BB mandates that interest is payable if the refund is not made within three months from the date of the refund application. In this case, the refund was sanctioned on 22-8-2005, more than seven years after the initial application. The Tribunal held that interest was due from 19-6-1998 to 22-8-2005, as the refund was paid after the expiration of the three-month period. The judgment cited the Supreme Court's decision in Ranbaxy Laboratories Ltd. v. Union of India to support the claim for interest.

Conclusion
The Tribunal rejected the Revenue's appeal, emphasizing that the interest claim was valid under Section 11BB of the Act due to the delayed refund sanction. The case laws cited by the Revenue were deemed irrelevant to the present case, as the circumstances differed. The judgment highlighted the clear statutory provisions governing interest payments on delayed refunds and upheld the respondent's entitlement to interest from the specified period.