2013 (1) TMI 243 - AT - Service Tax

Interest on delayed refunds - Held that - Notification No 4l/07-ST dated 06.10.07 itself provides clearly that the relevant date for determination of limitation is the date on which proper officer of Customs makes an order permitting clearance and loading of the goods for exportation. Therefore the finding that the claim is time barred because it is filed beyond the period when counted from the date of ARE-1 is appears to be against the provisions Notification. This aspect has to be once again examined in the light of statute. Observation of the lower authority that interest is not admissible since provisions of Section 11BB of Central Excise Act, 1944 are not applicable is against the law. Provisions of Section 83 of Finance Act, 1994 clearly provide that provisions of Section 11BB are made applicable to service tax matters but this aspect has not been verified before rejecting the refund claim by both the lower authorities. The lower authorities appear to have not taken care to verify and record the facts correctly and have also not applied statutory provisions correctly. In the interest of justice, the impugned orders are required to be set aside and the matter is remanded to the original adjudicating authority to verify the facts within three months from the date of receipt of this order.

Summary

Issues involved:
Claim for interest on delayed refunds dismissed by first appellate authority and upheld by adjudicating authority.

Analysis:

Issue 1: Interest on delayed refunds
The appellant filed four refund claims which were partly allowed and partly rejected by the adjudicating authority. The first appellate authority allowed the appeals and sanctioned the refund. However, the appellant's claim for interest under Section 11BB of the Central Excise Act, 1944 was denied on the grounds that the amounts were refunded within three months of the appeal being disposed of. The Tribunal found the issue identical to a previous case involving the same appellant. The Tribunal noted discrepancies in the lower authorities' findings and their misapplication of statutory provisions. It was observed that the lower authorities failed to verify and record facts correctly and apply the law accurately. The Tribunal set aside the impugned orders and remanded the matter to the original adjudicating authority for a correct determination within three months.

Issue 2: Verification of refund claims
The Tribunal scrutinized the refund claims filed under Notification No.41/07. It was found that some claims were denied due to incomplete documentation and time limitations. The Tribunal emphasized the need for proper verification of documents, especially lorry receipts, to establish the eligibility for refunds. The Tribunal also clarified that the relevant date for determining limitation should be in accordance with the notification and not solely based on the date of ARE-I. Additionally, the Tribunal highlighted the applicability of Section 11BB of the Central Excise Act, 1944 to service tax matters, contrary to the lower authorities' interpretation. The Tribunal directed the original adjudicating authority to re-examine the issues and ensure a correct and timely decision.

Conclusion:
The Tribunal allowed the appeal, setting aside the orders rejecting the interest claim of the appellant. It held that the appellant was eligible for interest on delayed refunds from three months of filing the refund claim until its sanctioning. The judgment emphasized the importance of proper verification, accurate record-keeping, and the correct application of statutory provisions in refund cases related to the export of goods.