2014 (8) TMI 436 - AT - Central Excise

Interest on delayed refund claim - Whether interest on delayed payment of refund sanctioned as per Rule 5 of the Cenvat Credit Rules, 2004 read with Section 11B of the Central Excise Act, 1944 is payable to the appellant or not - Held that - admittedly the refund has been ordered under Rule 5 of the Rules and there was a delay in sanctioning the refund, in the circumstances, the provisions of Section 11BB of the Act would clearly be attracted and as such the Tribunal was justified in holding that the provisions of clause (c) of the proviso to sub-section (2) of Section 11B and consequently Section 11BB of the Act are clearly applicable to the facts of the present case and as such the respondent is entitled to interest on delayed refund of Cenvat Credit as claimed by it - Following decision of CCE, Vapi vs. Reliance Industries Limited reported at 2010 (10) TMI 190 - GUJARAT HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Interest on delayed refund under Rule 5 of Cenvat Credit Rules, 2004 read with Section 11B of the Central Excise Act, 1944.

Analysis:
The appeal was filed concerning the rejection of interest on delayed refund by the first appellate authority under OIA No. KRS/59/Vapi/2007. The appellant requested interest on delayed refund of cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The refund claim was sanctioned after three months, leading to the request for interest under Section 11B of the Central Excise Act, 1944. The adjudicating authority rejected the interest claim, which was upheld by the first appellate authority. The appellant relied on a judgment in their favor by the Ahmedabad bench, upheld by the High Court of Gujarat in a case involving Reliance Industries Limited. The Apex Court also dismissed the Revenue's appeal against the High Court's decision, reinforcing the applicability of the law to the present case.

The revenue argued that the case laws cited by the appellant were not available when the first appellate authority passed the order. The issue at hand was whether interest on delayed refund under Rule 5 of the Cenvat Credit Rules, 2004 and Section 11B of the Central Excise Act, 1944 should be paid to the appellant. The judgment in CCE, Vapi vs. Reliance Industries Limited favored the appellant, stating that interest is due on delayed refund under Section 11BB of the Act. The judgment highlighted the applicability of Section 11BB and Circular 130/41/95-CX to refund claims under Rule 5 of the Cenvat Credit Rules, 2004.

Considering the law laid down by the High Court of Gujarat and upheld by the Apex Court, the appellant was deemed entitled to interest on the delayed payment of the refund claim sanctioned under Rule 5 of the Cenvat Credit Rules, 2004. Consequently, the appeal was allowed in favor of the appellant, granting the entitled interest on the delayed refund.