2013 (12) TMI 983 - AT - Central Excise

Interest on refund amount to be paid or actually paid u/s 11BB of central excise act, 1944 Held that - There has been delay of 1076 days in sanction and payment of refund claim as held by Commissioner (Appeals) in his order dated 26.8.2011 - The differential refund adjusted by original adjudicating authority was also an amount due to the appellant - The appellant will be entitled to interest on the entire refund amount for the period of 1076 days - appellant is also entitled to differential interest on the amount adjusted against confirmed dues by the original adjudicating authority - adjudicating authority is directed to quantify the differential interest and make payment of the same to the appellant Decided in favour of Assessee.

Summary

Issues Involved:
Calculation of interest on a refund claim under Section 11BB of the Central Excise Act, 1944.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad involved a dispute regarding the calculation of interest on a refund claim filed by the appellant, M/s. Vasant Dying and Printing Works (Now M/s. Bhagyodya Silk Industries). The appellant had filed a refund claim of Rs. 8,03,100, out of which Rs. 7,84,200 was sanctioned by the Assistant Commissioner, Central Excise Surat. The remaining amount, along with interest, was paid to the appellant for a specific period. The Commissioner (Appeals) held that interest should be paid from a certain date as per Section 11BB of the Central Excise Act, 1944, but calculated the interest only on a portion of the sanctioned amount.

The main issue to be decided was whether interest should be paid on the entire sanctioned refund amount or only on the amount actually paid to the appellant. The Commissioner (Appeals) determined a period for interest calculation, which the appellant contested, arguing that interest should have been calculated on the entire sanctioned refund amount. The Tribunal reviewed the case records and submissions and found that the appellant was entitled to interest on the full refund amount for the specified period. The original adjudicating authority had adjusted a portion of the sanctioned amount against outstanding dues, causing a delay in the payment of the remaining refund. Therefore, the Tribunal held that the appellant was entitled to interest on the entire refund amount for the period specified, including the amount adjusted against dues.

Consequently, the Tribunal allowed the appeal filed by the appellant, directing the original adjudicating authority to quantify and pay the appellant the additional interest due on the adjusted amount against confirmed dues. The decision emphasized the application of Section 11BB of the Central Excise Act, 1944 in determining the interest payable on refund claims, ensuring that the appellant received the appropriate interest on the sanctioned refund amount.