2015 (2) TMI 788 - AT - Central Excise

Interest on delayed refund- Held that - Relying on the decision of ITC Ltd. 2004 (12) TMI 90 - SUPREME COURT OF INDIA , the appellant is entitled for interest on delayed refund from the period after three months of order was passed by the Tribunal till sanction of the refund, i.e. during the period 5.10.2002 to 31.8.2004. Decided in favour of appellant.

Summary

Issues:
1. Claim of interest on delayed refund.
2. Interpretation of CBEC Circular No. 802/35/2004-CX.
3. Applicability of case laws Union of India vs. UP Twiga Fiber Glass Ltd. and J K Cement Works.

Analysis:
The appellant appealed against the rejection of their interest claim on a refund by the Revenue, arguing that the refund should have been sanctioned within three months from the order of the Tribunal. The initial adjudication took place on 16.6.97, confirmed by the Commissioner (Appeals) on 13.2.98, and challenged before the Tribunal. The Tribunal set aside the order on 5.7.2000, leading to readjudication by the adjudicating authority until 10.2.05. The appellant filed a refund claim on 23.6.2004, which was sanctioned on 31.8.2004. The appellant contended they were entitled to interest on delayed refund from 5.7.2000 to 31.8.2004. The lower authorities rejected the interest claim, stating the refund was sanctioned within three months of the refund application.

The appellant relied on CBEC Circular No. 802/35/2004-CX, stating that the refund must be returned within three months of the order by the Appellate Tribunal unless stayed by a superior Court. Referring to the case of ITC Ltd., the appellant argued they were entitled to interest post the Tribunal's order of 5.7.2000 until the refund sanction on 31.8.2004. The Revenue opposed, claiming the refund was sanctioned within two months of the refund claim filing, citing cases like Union of India vs. UP Twiga Fiber Glass Ltd. and J K Cement Works.

The Tribunal deliberated on the CBEC Circular and case laws cited. It noted that the J K Cement Works case was before the Circular's issuance, making it inapplicable. In the case of UP Twiga Fiber Glass Ltd., the relevance of the Circular was not addressed. Relying on ITC Ltd., the Tribunal held the appellant was entitled to interest on delayed refund from 5.7.2000 to 31.8.2004. Consequently, the appeal was allowed, setting aside the impugned order.