2010 (10) TMI 249 - AT - Central Excise

Whether the respondent is entitled for interest beyond three months of the date of application of refund or not - As per Customs Refund Application (Form) Regulations, 1995, the assessee has to file refund claim as prescribed under these regulations and on receipt of this application, the proper officer has to scrutinise the same and within 10 working days of the receipt, if it is found that there is some deficiency in the refund claim, the same is to be returned within 10 days to the assessee - as per the provisions of section 11BB of the Act, the respondents is entitled to claim the interest beyond the period of three months of the date of filing of application for refund claim till the refund claim is realised as held by the lower appellate authority - Accordingly decided in the favour of the assessee

Summary

Issues:
- Appeal against the order allowing interest on delayed refund
- Compliance with documentation requirements for refund claim
- Entitlement to interest on delayed refund beyond three months of application

Analysis:
1. Appeal against the order allowing interest on delayed refund:
The case involved an appeal by the Revenue against the lower appellate authority's decision to allow interest on delayed refund. The respondents had filed a refund claim for accumulated Cenvat credit on inputs used in manufacturing and exporting poly staple fibre without paying Central Excise duty under bond. The refund claim was initially not granted interest on delayed payment. The matter was remanded to decide the interest issue in accordance with the Central Excise Act and revised Board instructions. The Assistant Commissioner disallowed the interest without a personal hearing, leading the respondents to appeal. The Commissioner (Appeals) overturned the denial of interest, allowing it to be paid on the delayed refund. This decision was challenged by the Revenue before the Tribunal.

2. Compliance with documentation requirements for refund claim:
The Revenue argued that the respondents initially filed the refund claim without proper documents as required by the Cenvat Credit Procedure clause. However, upon complying with the defect memo and submitting the necessary documents, the refund claim was sanctioned within the prescribed time limit. The Revenue contended that interest was not payable in this situation. Reference was made to a previous case to support this argument.

3. Entitlement to interest on delayed refund beyond three months of application:
The respondents contended that they had filed the refund claim on a specific date but faced delays due to deficiencies in the application. They argued that as per regulations, if an application is found incomplete, the proper officer must return it within a specified period. In this case, the deficiency memo was issued beyond the stipulated time frame. The respondents also highlighted a relevant case where interest was granted on delayed refunds. The Tribunal considered these arguments and concluded that the respondents were entitled to interest beyond three months from the date of the refund application due to delays in sanctioning the claim. Citing legal provisions and precedents, the Tribunal upheld the lower appellate authority's decision to allow interest on the delayed refund, rejecting the Revenue's appeal.

In summary, the Tribunal upheld the decision to grant interest on the delayed refund, emphasizing compliance with documentation requirements and entitlement to interest beyond the initial three-month period from the date of the refund application. The judgment relied on legal provisions, regulations, and previous cases to support the conclusion that the respondents were entitled to the interest payment.