2012 (11) TMI 256 - HC - Central Excise

Whether interest on refund amount granted consequent to an order passed by Appellate Tribunal is payable to the opposite party after three months from the date of such order Held that - interest on delayed refunds under Section 11BB on the duty ordered to be refunded under sub-section (2) of Section 11B - on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty- refund has already been made to the assessee. The interest on refund will be made by the Assistant Commissioner accordingly - in favour of the assessee

Summary

Issues:
Interest on refund amount payable after three months from the order passed by Appellate Tribunal or from the date of filing of the original refund claim application.

Analysis:
The case involved the question of whether interest on a refund amount granted following an order by the Appellate Tribunal should be paid after three months from the order or after three months from the date of filing the original refund claim application. The appellant, a pharmaceutical company, filed refund claims for duty paid on inputs used in manufacturing final products exported without payment of Central Excise Duty. The relevant documents were submitted after a notification lapsed specified duties unutilized on March 1, 1997. A show cause notice was issued proposing claim rejection, leading to an order against the appellant, which was later set aside by CEGAT, stating the refund claim was submitted before March 1, 1997.

The Department's Special Leave to Appeal against CEGAT's order was dismissed by the Supreme Court. The Tribunal then allowed interest on the refund claim from three months after the filing date until payment. Section 11BB of the Central Excise Act 1944 provides for interest on delayed refunds, specifying rates and conditions. In this case, the Tribunal correctly interpreted Section 11BB, allowing interest on the refund three months after the filing date, as the entitlement to refund was before March 1, 1997, not based on any subsequent order.

The appellant had already received the refund, and the interest was to be paid by the Assistant Commissioner. The judgment answered the question against the Central Excise Department, in favor of the appellant, resulting in the dismissal of the Central Excise Appeal. The decision upheld the Tribunal's order for interest payment on the refund claim from three months after the filing date, aligning with the provisions of Section 11BB and the circumstances of the case.