2014 (7) TMI 482 - AT - Central Excise

Interest on delayed refund - refund of cenvat credit under Rule 5 of CCR - when appellant themselves have given up their claim on interest for the period for delay, whether they cannot raise this issue at the appellate stage - Held that - The refund under Rule 5 of the Cenvat Credit Rules, 2004 in the refund of in cash of the accumulated Cenvat Credit availed by a manufacturer in respect of inputs and input services used in the manufacturer of finished goods which had been exported without payment of duty under bond/LUT and which manufacture is unable to utilize for payment of duty on clearance for home consumption. Clause (c) of Proviso to section 11B(2) refers to the refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued under the Central Excise Act, 1944 , as the refund claim not hit by the principle of unjust enrichment. Thus section 11B covers the refund of Cenvat Credit mentioned in Clause (c) of the Provision to section 11B(c). Therefore, the refund claims filed under Rule 5 of the Cenvat Credit Rules, 2004 have also to be treated as refund claim under section 11B and the Proviso of Section 11B(2) would be applicable to the same. Just because the appellant by the letters addressed to the Jurisdictional Assistant Commissioner had given up their claim for interest on the amount of refund for the period of delay in sanction of the refund claims, they would not be estoppel from challenging the denial of interest and claiming the same when they are entitled for the same under the statutory provisions of Section 11BB. The impugned order is set aside and the Department is directed to pay the interest in terms of the provisions of Section 11BB. - Decided in favour of assessee.

Issues Involved:
1. Early hearing of the appeals.
2. Entitlement to interest on delayed refund claims under Section 11BB of the Central Excise Act, 1944.
3. Rejection of appeals by the Commissioner (Appeals) on grounds of being time-barred.

Detailed Analysis:

1. Early Hearing of the Appeals:
The Tribunal noted that although only the miscellaneous application for early hearing was listed, the matter could be taken up for final disposal since it involved a short issue already settled by the judgment of the Apex Court. Thus, the miscellaneous applications were allowed, and the appeals were heard for final disposal.

2. Entitlement to Interest on Delayed Refund Claims:
The appellant, engaged in the manufacture and export of two-wheeler motor vehicles and parts, had filed three refund claims under Rule 5 of the Cenvat Credit Rules, 2004, for the periods from July 2005 to March 2006. These claims were filed within the stipulated period and met all conditions. However, the Department delayed the finalization of these claims, leading to potential interest liability under Section 11BB for delays beyond three months.

The appellant submitted letters in 2008, stating they would not claim interest due to the urgency of receiving the refund amounts. Despite this, the appellant later appealed for interest on the delayed refunds. The Tribunal referred to the Apex Court's judgment in Dunlop India Ltd. & Madras Rubber Factory Ltd. Vs. Union of India, which established that there is no estoppel in law against a party in taxation matters. Additionally, the Apex Court's ruling in Union of India Vs. UP Twiga Fiber Glass Ltd. clarified that the relevant date for interest liability under Section 11BB is the date of the refund application, not the date of the decision on the refund.

The Tribunal concluded that the appellant was entitled to interest on the refund amounts as per Section 11BB, irrespective of their earlier letters waiving the claim for interest. The Department's decision to deny interest based on these letters was incorrect and contrary to the law laid down by the Apex Court.

3. Rejection of Appeals by the Commissioner (Appeals) on Grounds of Being Time-Barred:
The Commissioner (Appeals) had dismissed two appeals as time-barred due to delays of 29 days and 10 days beyond the prescribed limitation period of 60 days. The third appeal was dismissed on the grounds that the appellant had waived their claim for interest.

The Tribunal noted that under Section 35A of the Central Excise Act, 1944, the Commissioner (Appeals) could condone delays up to 30 days if there was a valid reason. The reason given by the appellant for the delay was the time taken to obtain legal advice. The Tribunal found this reason valid, particularly given the context of the appellant's earlier letters waiving interest. Consequently, the Tribunal held that the Commissioner (Appeals) had erred in rejecting the two appeals as time-barred.

Conclusion:
The Tribunal set aside the impugned order and directed the Department to pay interest on the delayed refunds as per Section 11BB. The appeals filed by the appellant were allowed, emphasizing that statutory rights to interest cannot be waived based on concessions made in letters to the authorities.

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