2013 (1) TMI 584 - AT - Central Excise

Rebate claim adjusted against the demand of interest - whether the appropriation of sanctioned rebate claim as held to be bad by the Commissioner (Appeals) would be entitled to payment of interest from the date of refund claims made by them - Held that - As decided in Nijrang Print Pack Pvt. Ltd. Vs. Union of India 2002 (10) TMI 113 - HIGH COURT OF GUJARAT AT AHMEDABAD such adjustments are not appropriate, and the refund is actually not given to the assessee, assessee is entitled to the interest on the same. In the present case also, refund has actually been sanctioned to the appellant but stand adjusted. And as such, the appellants are entitled to the refund claim as also interest on the delayed refund - remand the issue to the original authority for deciding the issue of interest and the quantum of interest as the interest issue was never agitated before the original adjudicating authority inasmuch as the refund was never sanctioned by him.

Summary

Issues involved:
Appropriation of sanctioned rebate claims against interest liability, entitlement to payment of interest on refunded amount, failure to raise interest issue before original adjudicating authority.

Analysis:

1. The appeals involved the appropriation of sanctioned rebate claims against interest liability by the original adjudicating authority. The Commissioner (Appeals) set aside the appropriation, citing various Tribunal decisions and a circular clarifying that refunds should only be adjusted against confirmed demands. The appellants, engaged in pharmaceutical manufacturing, had their rebate claims sanctioned but adjusted against an interest demand of approximately Rs.35 lakhs. The Commissioner allowed the appeal against the appropriation, providing consequential relief.

2. The issue of payment of interest arose as the rebate was sanctioned within the prescribed time limit, but the amount was appropriated towards interest liability. The Commissioner held that the plea for interest payment was not legally tenable. The appellants challenged this decision in the present appeal, questioning their entitlement to interest from the date of refund claims.

3. The key issue in the appeal was whether the appellants were entitled to interest on the refunded amount due to the improper appropriation by the original adjudicating authority. Citing decisions from various High Courts and the Supreme Court, it was established that such adjustments were inappropriate, and the assessee should receive interest on the refunded amount. The Tribunal referred to specific cases where interest was granted from the date of application for refund until the actual grant of refund.

4. Despite the sanction of the refund to the appellants, the amount was adjusted, leading to their entitlement to both the refund claim and interest on the delayed refund. The Tribunal emphasized that the interest issue was not raised before the original adjudicating authority, necessitating a remand for a decision on the interest and its quantum based on relevant legal precedents.

5. Consequently, the Tribunal allowed all appeals by way of remand, setting aside the impugned order and directing the original authority to address the interest issue and quantum in alignment with the decisions referenced in the judgment. The appellants were granted the liberty to rely on additional relevant decisions during the proceedings.

This comprehensive analysis of the judgment highlights the intricate legal considerations surrounding the appropriation of rebate claims, entitlement to interest on refunded amounts, and the procedural aspects of raising issues before the adjudicating authorities for a fair resolution.