2014 (4) TMI 379 - HC - Central Excise

Denial of refund claim - CENVAT Credit - Interest on delayed refund - Held that - There is a specific provision in the Act for refund of credit of duty paid on excisable goods used as inputs and while dealing with interest on refund in Section 11BB of the Act, no distinction has been made in between such credit and any other duty referred to in the first proviso to sub-section (2) of Section 11B of the Act - Matter remitted back - Decided in favour of assessee.

Summary

Issues:
- Refund of cenvat credit
- Applicability of interest on refund

Refund of Cenvat Credit:
The appellant utilized excisable goods as inputs, entitling them to cenvat credit. However, due to certain government notifications, they were initially unable to utilize this credit against excise liability on produced goods. Subsequently, it was clarified that these notifications did not prevent credit utilization. By then, the goods became exempt from excise duty, eliminating the need to adjust the cenvat credit against excise duty. The appellant sought a refund of the unutilized credit, initially denied by the Assessing Officer but later granted by the Commissioner of Appeals. The Tribunal, however, refused to award interest on the refunded amount, stating it was not a refund of duty. The appellant argued that Section 11BB and Section 11B(2)(c) of the Central Excise Act, 1944 were not considered by the Tribunal.

Applicability of Interest on Refund:
Section 11BB of the Act mandates interest payment if duty ordered to be refunded is not repaid within three months of the application. The appellant requested interest from the date three months after the application until the refund date. Section 11B(2)(c) provides for the refund of credit of duty paid on excisable goods used as inputs. The court noted that no distinction was made in Section 11BB regarding the type of duty to be refunded, indicating that interest should apply uniformly. Consequently, the court set aside the Tribunal's decision and remitted the matter for a fresh determination, except for the conclusion that no interest was payable on the refund.

This judgment clarifies the entitlement to cenvat credit, the process of refunding unutilized credit, and the application of interest on such refunds under the Central Excise Act, emphasizing the need for a comprehensive consideration of relevant statutory provisions in determining refund entitlements and interest payments.