2014 (7) TMI 879 - HC - Central Excise

Claim of interest on delayed refund - export of goods - the claim of the refund of the additional duty deposited by the petitioner was rejected by the Deputy Commissioner of Central Excise by its orders dated 28.11.2008 and 21.10.2008. The claim of the petitioner that it is entitled to rebate of CVD is no longer res integra and the said question has been decided in favour of the petitioner, albeit, after a considerable lapse of time. - Held that - there has been an inordinate delay in allowing the rebate claims filed by the petitioner considering that the raw materials were imported almost eight years ago. It is appropriate that interest at the rate of 8% be granted to the petitioner on the refund sanctioned by the authority from the expiry of three months from the date when the claim was first rejected by the concerned Authority. - petition allowed - Decided in favor of assessee.

Summary

Issues:
1. Entitlement to interest on delayed refunds under Section 11B of the Central Excise Act, 1944.
2. Appeal against rejection of interest application by Assistant Commissioner, Central Excise.
3. Applicability of interest rate and timeline for interest calculation.

Issue 1: Entitlement to interest on delayed refunds under Section 11B of the Central Excise Act, 1944:
The petitioner, engaged in manufacturing and exporting stainless steel cutlery and utensils, filed rebate claims under Section 11B of the Act for refund of Additional Duty of Customs or Countervailing Duty (CVD) on imported raw materials. The Deputy Commissioner of Central Excise sanctioned some claims but disallowed others. Appeals were filed, resulting in a revision application allowed by the Government of India, leading to the sanction of further rebate claims. Subsequently, the petitioner sought interest on the delayed refunds, which was rejected by the Assistant Commissioner, Central Excise. The High Court considered the delay in processing the claims, citing a precedent where interest was granted from the expiry of two months from the initial claim rejection. It was held that interest at 8% should be granted from the expiry of three months from the initial rejection date until the refund amount.

Issue 2: Appeal against rejection of interest application by Assistant Commissioner, Central Excise:
The petitioner appealed the rejection of the interest application by the Assistant Commissioner, Central Excise, arguing that the rejection was not appealable. The Commissioner of Excise (Appeals) dismissed the appeal on the grounds that the petitioner did not challenge the initial sanction of refund without interest and that the rejection order was not appealable. The High Court disagreed, emphasizing the entitlement to interest on delayed refunds and the relevance of the previous court order granting interest from the rejection date. Consequently, the High Court allowed the petition and directed the grant of interest at 8% on the refund amount from the specified timeline.

Issue 3: Applicability of interest rate and timeline for interest calculation:
The High Court referred to a previous court order that allowed interest on refunded amounts from the date of rejection by the concerned authority. Considering the delay in processing the rebate claims and the favorable decision for the petitioner, interest at 8% was deemed appropriate from three months after the initial rejection date until the refund of the amount. The Court's decision aligned with the principle of granting interest on delayed refunds and aimed to compensate for the extended processing time of the claims. The Court's ruling provided clarity on the interest rate and timeline for interest calculation in such cases, ensuring fair treatment for claimants seeking refunds under the Central Excise Act.