2011 (5) TMI 864 - AT - Central Excise

Interest of refund claim - claim was not in the proper format - Denial of the claim for interest on the ground that Notification No. 5/2006-C.E., dated 14-3-2006 covering claims for refund of unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 does not provide for any grant of interest in the event of delay of grant of refund - Held that - assessees that non-mention of eligibility to claim interest in the event of delay in sanction of refund in Notification 5/2006-C.E. is not fatal to the claim of the assessees for interest, as Section 11B is the statutory provision which provides that in the event of delay in grant of refund, interest is payable. I, therefore, set aside the impugned order which rejects the claim for interest on the above ground. However, the question what is to be taken as the date of filing claim for refund, whether Feb., 2008 as claimed by the assessees or Dec 09 as held by the Revenue, will have to be considered for the purpose of determination of delay, if any, in the sanction of the refund and in the event of it being held that there was delay, then only interest becomes payable. The Commissioner (Appeals) has not addressed the issues raised before him in the appeal filed by the assessees. I therefore set aside the impugned order and remit the case for fresh decision to the lower appellate authority - Decided in favour of assessee.

Summary

Issues:
Claim for refund rejection, sufficiency of documents, proper format of claim, interest on delay in refund sanction, interpretation of Notification No. 5/2006-C.E., determination of filing date for refund claim.

Analysis:
The assessees initially filed a refund claim for a specific amount, which was rejected due to insufficient documents. Subsequent attempts to refile the claim were also unsuccessful as the documents were found deficient and not in the proper format. A show-cause notice was issued proposing rejection based on the claim not being in the correct format. The Deputy Commissioner considered a later date as the submission date for required documents and sanctioned the refund within three months, denying interest on the basis of timely processing. The Commissioner (Appeals) upheld the denial of interest citing Notification No. 5/2006-C.E., which did not explicitly mention interest for delays in refund grants.

Upon review, the judge acknowledged the statutory provision in Section 11B, which mandates interest payment in case of delayed refunds. The judge disagreed with the previous decision, stating that the absence of explicit interest provision in the notification does not negate the assessees' entitlement to interest. The crucial issue of determining the correct filing date for the refund claim was highlighted, as it impacts the assessment of any delay in refund processing. The judge emphasized the necessity for the lower appellate authority to address the raised issues and make a fresh decision considering the directions provided.

Ultimately, the judge allowed the appeal through remand, indicating that the case should be reconsidered by the lower appellate authority to determine the filing date accurately and decide on the interest payment in case of any delay. The decision to remit the case for fresh consideration was made to ensure a fair assessment of the issues raised by the assessees and to provide them with a reasonable opportunity for a hearing.

This judgment clarifies the importance of timely and accurate submission of refund claims, the statutory entitlement to interest in case of delays, and the need for proper consideration of all relevant factors by the appellate authorities in refund claim disputes.