2016 (3) TMI 1214 - AT - Central Excise

Interest on delayed refund - denial on the ground that the refund claim on 14.7.2009 arises as a consequence of CESTAT order No. 333/2009 dated 5.3.2009 and as such in terms of Section 11B of the Central Excise Act, the relevant date for submission of refund claim shall be the date of order of CESTAT i.e. 5.3.2009 - Held that - the Hon ble Supreme Court in the case of Ranbaxy Laboratories Ltd 2011 (10) TMI 16 - Supreme Court of India has categorically held that the appellant is entitled to interest after the expiry of three months from the date of filing the refund application till the refund is finally sanctioned - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on insufficient documentary evidence and unjust enrichment. Refund of interest on delay of refund claim sanction.

Analysis:
The appeal was against the order rejecting the appellant's refund claim of duty debited under protest. The Deputy Commissioner rejected the refund claim due to insufficient documentary evidence and unjust enrichment. The Commissioner (Appeals) upheld this decision. However, the CESTAT allowed the appeal with consequential relief, leading to the refund of a significant amount. The appellant then sought interest on the delayed sanction of the refund claim.

In the current case, the issue revolved around the entitlement to interest on the delayed refund claim sanction. The appellant argued that the impugned order contravened legal provisions and binding judicial precedents. Citing various decisions from the Tribunal, High Court, and Supreme Court, the appellant contended that interest is due after three months from the refund application date until the final sanction, as established in the Ranbaxy Laboratories Ltd case. The appellant's stance was supported by legal principles and interpretations from multiple judicial authorities.

On the contrary, the respondent defended the impugned order, asserting that the right to claim a refund arises only after the tribunal's decision, as seen in the Final order dated 17.4.2009. The respondent contended that the refund was sanctioned within the stipulated time under Section 11B, emphasizing the date of the tribunal's decision as the starting point for interest calculation. However, the appellant's arguments, backed by legal precedents, highlighted the specific criteria for interest payment post-refund application, as clarified by the Supreme Court and other judicial bodies.

After considering the submissions and examining the records, the presiding member referred to the Ranbaxy Laboratories Ltd case and reiterated the entitlement to interest from three months after the refund application date until the final sanction. The judgment emphasized the significance of the application date for interest calculation purposes, aligning with established legal interpretations. The decision was further supported by the High Court of Karnataka's ruling in CC Airport & ACC Bangalore Vs Pfizer Products India Pvt Ltd, reinforcing the obligation to pay interest post-application within the specified timeframe. Ultimately, the impugned order was deemed unsustainable in law, and the appeal was allowed with consequential relief, consistent with the legal principles established in the Ranbaxy Laboratories case.

In conclusion, the judgment clarified the legal position regarding interest on delayed refund claims, emphasizing the significance of the application date for interest calculation purposes. The decision aligned with established legal interpretations and judicial precedents, ultimately allowing the appeal and granting the appellant the entitled relief with interest.