2015 (12) TMI 1654 - AT - Central Excise

Interest for delayed sanction of refund - Section 11BB of the CEA 1944 - relevant date for calculation of interest - Held that - the liability of the Revenue to pay interest under Section 11BB ibid commences from the date of expiry of three months from the date of receipt of application of refund under sub-section (1) of Section 11B ibid. Time taken for verification of documents issuance of show cause notice and adjudication of the dispute by Revenue should be excluded for the purpose of computation of the period for sanctioning the refund - In this case since the assessee had submitted all the desired documents on 22.11.2004 such date should be considered as the relevant date for filing the refund application. Since the refund amount was not paid within three months from the date of its filing the assessee is entitled for interest from the date of expiry of three months from filing the refund application i.e. 21.02.2005 till the date of actual payment of the refund amount i.e. 03.01.2006 - appeal dismissed - decided against Revenue.

Summary

Issues:
Interest claim under Section 11BB of the Central Excise Act, 1944 for delayed sanction of refund filed under Section 11B.

Analysis:
The case involved an appeal by both the assessee and the Revenue against an order dated 07.04.2006 related to interest claim under Section 11BB of the Central Excise Act, 1944 for delayed sanction of refund filed under Section 11B. The assessee opted for a full exemption on textile goods, reversed an ad hoc amount, and filed a refund application due to an excess amount debited. The refund was allowed, but interest on delayed sanction was not paid. The main contention was the relevant date for filing the refund application, with the assessee claiming it was on 24.09.2004, while the Revenue argued it was on 22.11.2004. The statutory provisions of Section 11B and Section 11BB were crucial in determining the liability of the Revenue to pay interest on delayed refunds.

The Tribunal noted that the liability to pay interest under Section 11BB starts from the expiry of three months from the date of receipt of the refund application under Section 11B. The date for filing the refund application was considered to be 22.11.2004, as all relevant documents were submitted on that date. Since the refund was not paid within three months from this date, the assessee was entitled to interest from 21.02.2005 until the actual payment date of 03.01.2006. The judgment referred to the case of Ranbaxy Laboratories Ltd. vs. Union of India to support the interpretation of Section 11BB, emphasizing that interest becomes payable after three months from the date of the refund application.

Ultimately, the appeal filed by the assessee was allowed, and the appeal of the Revenue was dismissed. The judgment clarified the timeline for interest payment on delayed refund sanctions and upheld the assessee's entitlement to interest in this case.