2012 (7) TMI 512 - HC - Central Excise

Entitlement to interest on the delayed refund - @ 6% per annum in terms of the notification bearing No.67/03-CE(NT) dated September 12, 2003 issued for the purposes of Section 11BB as decided by the Assistant Commissioner - Held that - As decided in Commissioner of Central Excise vs. ITC Limited 2004 (12) TMI 90 - SUPREME COURT OF INDIA interest was payable @ 12% per annum for delay in refund of the amount paid by way of predeposit - the Revenue is trying to take advantage of the fact that this Court while referring to the circular No.802/35/2004-CX dated December 8, 2004 directed the respondent to pay interest to the appellant in terms of the circular on the pre-deposit of the delayed refund within two months from today it has to be construed that this Court meant the rate of interest which was awarded by the Supreme Court in the case Commissioner of Central Excise vs. ITC Limited which was the rate quantified by the Supreme Court in absence of any statutory provision in the said Act. contention of the Revenue that the Central Government is the only authority to fix the rate of interest and that Section 35FF was brought in by providing rate of interest on payment of pre-deposit delayed refund and quantified the rate of interest to be the same as in Section 11BB would not apply to the petitioner s case as Section 35FF has been introduced in the Act by way of an amendment inserted with effect from May 10, 2008 by Section 85 of the Finance Act, 2008 (18 of 2008). Therefore, we clarify that the petitioner is entitled to interest @ 12% per annum on the amount of refund - in favour of assessee.

Summary

Issues:
Clarification and/or modification of judgment regarding the rate of interest payable on delayed refund of pre-deposit amount.

Analysis:
The petitioner appealed under Section 35G of the Central Excise Act, 1944 against a Tribunal order that did not direct payment of interest on a refund. The High Court allowed the appeal, holding that interest was payable on the pre-deposit amount as per a Supreme Court decision. The petitioner sought clarification on the rate of interest, claiming 12% per annum based on the Supreme Court judgment. The Revenue argued that interest should be paid at 6% per annum as per a notification. The Court noted that the Supreme Court decision governed the case, directing interest payment at 12% per annum, as no specific rate was mentioned in the circular. The Court rejected the Revenue's argument that the statutory rate was 6%, clarifying that the petitioner was entitled to 12% interest. The Court emphasized parity with the Supreme Court decision and directed the Revenue to pay the interest within two months.

The Revenue contended that the matter was sub-judice before the Supreme Court and that the statutory rate of interest was fixed at 6% per annum. The Court rejected this argument, clarifying that the Supreme Court's decision on interest payment at 12% per annum applied to the petitioner's case. The Court highlighted that the introduction of Section 35FF did not affect the petitioner's entitlement to interest at 12% per annum. The Court held that the petitioner should receive interest at the rate specified by the Supreme Court, directing the Revenue to pay the interest within two months.

The Court analyzed the Supreme Court's decision on interest payment for delayed refunds, emphasizing that the absence of a statutory provision led to the 12% per annum rate. The Court rejected the Revenue's argument that the statutory rate was 6%, clarifying that the petitioner was entitled to 12% interest. The Court directed the Revenue to pay the interest within two months, maintaining parity with the Supreme Court's decision.

In conclusion, the High Court clarified that the petitioner was entitled to interest at 12% per annum on the refund amount, rejecting the Revenue's argument for a 6% interest rate. The Court directed the Revenue to pay the interest within two months, aligning with the Supreme Court's decision on interest payment for delayed refunds.