2013 (7) TMI 837 - HC - Central Excise

Section 11BB of the Central Excise Act,1944 -Date from which the Revenue is liable to pay interest on delayed refund of excise duty - Is it from expiry of three months from the date of application for refund under Section 11B (1) or the receiving of assent of the President to the Finance Bill, 1995 in cases covered by proviso to section 11BB or from expiry of three months from the date of actual order of refund under section 11B (2) of the Central Excise Act, 1944 Held that - In Ranbaxy Laboratories Ltd. Vs. Union of India reported in 2011(10)TMI 16 Supreme Court of India, the Apex court has concluded as follows, 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 or refund is made. Similar view was expressed in the case JK Cement Works Vs. Asstt. Commissioner of Central Excise Customs reported in 2004 (2) TMI 78 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR . In the present case , liability to pay interest on delayed refunds starts on expiry of three months from the date application for refund is filed or in cases covered by the proviso to sec.11BB, on expiry of three months from the date Finance Bill, 1995 received the assent of the President and not from the date of passing of actual order for refund under section 11B(2) of the Act - In the instant case, the application for refund was filed on 5.8.1991 and therefore it is a case covered by first proviso to Section 11BB of the Act. Consequently, the petitioner will be entitled to interest after three months from the date the Finance Bill, 1995 received the assent of the President being 26.5.1995. Thus interest is payable to the petitioner from 26.8.1995 till the date of refund Decided in favor of Assessee.

Issues Involved:
1. Date from which the Revenue is liable to pay interest on delayed refund of excise duty.
2. Maintainability of the writ petition in light of the alternative remedy of appeal.
3. Justification for non-payment of interest by the authorities.

Issue-wise Detailed Analysis:

1. Date from which the Revenue is liable to pay interest on delayed refund of excise duty:

The primary issue was to determine whether the interest on delayed refund of excise duty should be calculated from:
- The expiry of three months from the date of application for refund under Section 11B(1).
- The date of receiving the President's assent to the Finance Bill, 1995, in cases covered by the proviso to Section 11BB.
- The expiry of three months from the date of the actual order of refund under Section 11B(2) of the Central Excise Act, 1944.

The petitioner filed for a refund on 5.8.1991, which was delayed due to the authorities' inaction. The Commissioner (Appeals) allowed the refund on 14.12.2009, and the amount was refunded on 5.8.2010. However, no interest was paid on the refunded amount. The court held that under Section 11BB, the liability to pay interest starts after the expiry of three months from the date of receipt of the application for refund, not from the date of the actual order of refund. The court emphasized that the interest liability accrues soon after the expiry of the period of three months from the date of application or the date of the President's assent to the Finance Bill, 1995, and is independent of the date on which the refund order is made under Section 11B(2).

2. Maintainability of the writ petition in light of the alternative remedy of appeal:

The Revenue argued that the petitioner should have challenged the orders dated 7.6.2010 and 5.8.2010 by filing an appeal under Section 35(1) of the Act, and thus, the writ petition should be dismissed due to the availability of an alternative remedy. The court, however, noted that the orders dated 7.6.2010 and 5.8.2010 were administrative orders sanctioning the refund and not adjudicatory orders. Therefore, no appeal was required or maintainable against these orders. The court also highlighted that relegating the petitioner to another forum would be a travesty of justice, given the prolonged delay of over 20 years in resolving the issue.

3. Justification for non-payment of interest by the authorities:

The authorities contended that the interest was not sanctioned because the date of the refund order by the Commissioner (Appeals) was considered the relevant date for calculating the interest. The court rejected this argument, stating that the liability to pay interest under Section 11BB starts after three months from the date of the application for refund, not from the date of the refund order. The court referred to precedents, including the Supreme Court's judgment in Ranbaxy Laboratories Ltd. v. Union of India, which clarified that interest becomes payable on the expiry of three months from the date of receipt of the application for refund, irrespective of the date of the refund order.

Conclusion:

The court concluded that the petitioner is entitled to interest from 26.8.1995 (three months after the President's assent to the Finance Bill, 1995) until the date of refund. The writ petition was allowed, and the respondent was directed to calculate and pay the interest within two weeks from the date of production of a certified copy of the court's order.

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