2011 (10) TMI 16 - SC - Central Excise

Interest on Refund - Commencement of liability of revenue to pay Interest - expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made - Held that - liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.

Summary

Issues Involved:
1. Commencement of the period for the purpose of payment of interest on delayed refunds under Section 11BB of the Central Excise Act, 1944.

Detailed Analysis:

Core Issue:
The central issue in these appeals is the determination of the commencement date for the liability of the revenue to pay interest on delayed refunds under Section 11BB of the Central Excise Act, 1944. Specifically, whether the interest liability starts from the date of expiry of three months from the date of receipt of the refund application or from the date of the refund order.

Facts of the Case:
The appellant filed claims for rebate of duty amounting to Rs. 4,84,52,227/- between April and May 2003, which were initially rejected by the Assistant Commissioner of Central Excise. The Commissioner (Appeals) later sanctioned the rebate claim on 30th September 2004. The revenue's appeal against this decision was unsuccessful, and the rebate was ultimately sanctioned on 11th January 2005. The appellant filed a claim for interest on 21st April 2005 due to the delay in payment of the rebate.

Contentions:
- Assessee's Argument: The assessee contended that the liability for interest under Section 11BB starts from the expiry of three months from the date of receipt of the refund application, not from the date of the refund order. They argued that the language of Section 11BB is clear and unambiguous in this regard. They cited the decision in Union of India Vs. U.P. Twiga Fiber Glass Ltd. and various departmental circulars to support their claim.

- Revenue's Argument: The revenue argued that since no refunds were sanctioned under Section 11B, the provisions of Section 11BB were not applicable. Alternatively, they contended that the refund orders were sanctioned within three months of the appellate authority's orders, thus no interest was payable.

Legal Provisions:
- Section 11B: Deals with claims for refund of duty.
- Section 11BB: Specifies that interest on delayed refunds is payable if the refund is not made within three months from the date of receipt of the application for refund.

Court's Analysis:
- The court noted that Section 11BB comes into play only after an order for refund has been made under Section 11B. The interest liability under Section 11BB starts if the refund is not made within three months from the date of receipt of the refund application.
- The Explanation to Section 11BB clarifies that an order for refund by an appellate authority or court is deemed to be an order under Section 11B(2) for the purposes of Section 11BB. This does not affect the commencement date for interest liability.
- The court emphasized that fiscal legislation must be construed strictly, with no room for intendment or implications beyond the clear language of the statute.

Relevant Circulars:
- Circular dated 1st October 2002: Reiterated that interest under Section 11BB is "automatically" applicable for any refund sanctioned beyond three months from the date of receipt of the refund application.

Precedents:
- U.P. Twiga Fiber Glass Ltd.: The court affirmed that the relevant date for interest liability is the date of application for refund, not the date of the refund order.
- Shreeji Colour Chem Industries: Emphasized the date of receipt of the refund application as the starting point for interest liability under Section 11BB.

Conclusion:
The court concluded that the liability for interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of the refund application under Section 11B(1) of the Act, not from the date of the refund order.

Judgment:
- The appeal by the assessee (C.A.No.6823 of 2010) was allowed.
- The appeals by the revenue (C.A.Nos.7637/2009 and 3088/2010) were dismissed.
- The jurisdictional Excise officers were directed to determine and pay the interest amount due to the assessees within eight weeks.

Costs:
There was no order as to costs in the circumstances of the cases.