2010 (4) TMI 702 - AT - Central Excise

Interest on delayed payment of interest - cannot be permissible under the Central excise Act and the Rules made thereunder for want of any specific provision in the Act or the Rules - Tribunal has no power to award such interest to the assessee Appeal dismissed

Summary

Issues Involved:
1. Entitlement to interest on the amount of duty paid under protest.
2. Applicability of Section 11BB of the Central Excise Act, 1944.
3. Legality of the authorities' decision to grant limited interest.
4. Relevance of precedents cited by both parties.

Issue-wise Detailed Analysis:

1. Entitlement to interest on the amount of duty paid under protest:
The appellants argued that they were entitled to interest on the amount of duty paid under protest because the amount was withheld by the respondent without authority of law. They contended that the retention of the amount prevented them from using their own money, thus justifying compensation in the form of interest. The authorities below granted interest only to the extent of Rs. 1,23,447/- out of the claimed Rs. 44,53,516/-, based on the provisions of Section 11BB of the Central Excise Act, 1944.

2. Applicability of Section 11BB of the Central Excise Act, 1944:
Section 11BB deals with interest on delayed refunds, specifying that interest is payable if the refund is not made within three months from the date of receipt of the application. The authorities below adhered to this provision, granting interest only from the date of the refund application, not from the date of duty payment. The Tribunal upheld this interpretation, emphasizing that statutory authorities must operate within the scope of the law and cannot award interest beyond what is stipulated in Section 11BB.

3. Legality of the authorities' decision to grant limited interest:
The Tribunal found no fault with the authorities' decision to grant limited interest, as it was based on the statutory provisions of Section 11BB. The authorities recalculated the interest based on the dates of refund applications and the period of delay, resulting in the sanctioned amount of Rs. 1,23,447/-. The Tribunal noted that the authorities had properly assessed the materials on record and applied the law correctly.

4. Relevance of precedents cited by both parties:
The appellants cited various precedents to support their claim for interest, including cases under the Income Tax Act and other statutes. However, the Tribunal distinguished these cases, noting that they involved different legal provisions and contexts. The Tribunal emphasized that decisions under the Income Tax Act or other statutes are not relevant for interpreting provisions of the Excise Act. The Tribunal also referred to the Larger Bench decision in Sun Pharmaceutical case, which clarified that interest on delayed payment of interest is not permissible under the Central Excise Act due to the absence of a specific provision.

Conclusion:
The Tribunal dismissed the appeal, affirming the authorities' decision to grant limited interest based on Section 11BB of the Central Excise Act. It concluded that the authorities acted within the scope of their powers and correctly applied the law. The precedents cited by the appellants were found to be inapplicable to the present case.