2007 (8) TMI 98 - AT - Central Excise

Interest on refund - The appellant file for refund along with applicable interest from 2-9-1986 till the date of sanction of refund in terms of final order dated 4-7-2005 but provision for grant of interest came into effect only in 26-5-1995 - Allowed interest on refund accordingly

Summary

Issues:
1. Refund entitlement under Rule 41 of CESTAT Procedure Rules.
2. Entitlement to interest under Sec. 11(BB) of the Central Excise Act.
3. Proper course of action against Assistant Commissioner's order.
4. Interpretation of Sec. 11BB regarding interest on delayed refunds.
5. Implementation of Tribunal's final order by the lower authority.

Analysis:
1. The applicant filed a miscellaneous application seeking direction for refund of Rs. 29,00,612/- along with applicable interest under Rule 41 of CESTAT Procedure Rules. The final order dated 4-7-2005 allowed the appeal with consequential relief, leading to the refund claim. The Assistant Commissioner sanctioned only Rs. 26,72,780/-, prompting the applicant to claim entitlement to the full amount along with interest under Sec. 11(BB).

2. The Tribunal analyzed the refund claim and held that it was not hit by unjust enrichment, allowing the appeal with consequential relief. The Tribunal emphasized that if a refund claim is not disposed of within 3 months from the date of claim, the claimant is entitled to interest under Sec. 11(BB). The entitlement to interest arises even if the claim is rejected by the Assistant Commissioner and subsequently favored by the Commissioner (Appeals) or the CESTAT.

3. The Tribunal clarified that interest under Sec. 11BB is calculated from the date of the refund claim application and not from the date of the order granting refund. It highlighted the importance of examining Sec. 11BB before rejecting a claim for interest, especially in cases where the lower authority delays the refund process. The Tribunal directed the Assistant Commissioner to implement the final order by paying interest on the refund amount.

4. The Tribunal emphasized that the appellant is entitled to interest under Sec. 11BB, starting after the expiry of three months from the date on which the Finance Bill 1995 received the assent of the President. The rates of interest notified by the Government at different periods should be adopted for calculating the interest amount. The Tribunal also allowed the appellant to challenge the quantum of refund before the Commissioner (Appeals).

5. The Tribunal concluded by allowing the miscellaneous application in favor of the applicant and directed the lower authority to implement the final order by paying interest on the refund amount. The judgment was pronounced in open court on 17-8-2007.