2015 (3) TMI 472 - AT - Central Excise

Denial of interest on delayed refund of pre-deposit made - Dispute settled in 1997 but refund sanctioned in 2002 - Held that - The decision in the case of Orient Enterprises (1998 (3) TMI 137 - SUPREME COURT OF INDIA) is not applicable to the facts of this case as in this case, the appellant is claiming interest for the period March 1998 to February 2002, for the refund claim filed in December 1997. In the year 1997, the provisions of Section 11BB of the Central Excise Act, 1944 were in force. Therefore, the case law relied upon by the ld. AR is not relevant. Further, I find that in the case of Galaxy Entertainment Corpn. Ltd. 2010 (5) TMI 429 - CESTAT, MUMBAI this Tribunal has held that interest is payable on delayed refund. Following the precedent decision of the tribunal, the appellant is entitled for interest on delayed refund. - Decided in favour of assessee.

Summary

Issues:
1. Denial of interest on delayed refund of pre-deposit made during investigation.

Analysis:
The appellant appealed against the order denying interest on a pre-deposit made during an investigation in 1995, which was settled in 1997. The refund claim was sanctioned in February 2002, leading to the appellant claiming interest for the period from March 1998 to February 2002. The appellant relied on a Tribunal decision in Galaxy Entertainment Corpn. Ltd. case, stating that interest is applicable after three months from the filing of the refund claim. The respondent argued that prior to May 26, 1995, there was no provision for interest on delayed refunds as per a Supreme Court ruling in UOI vs. Orient Enterprises case.

The Tribunal considered the submissions and found that the case law cited by the respondent was not relevant as the appellant claimed interest for the period when Section 11BB of the Central Excise Act, 1944 was in force. Referring to the Galaxy Entertainment Corpn. Ltd. case, the Tribunal held that interest is payable on delayed refunds. Therefore, the Tribunal set aside the impugned order and allowed the appeal, granting the appellant interest on the delayed refund from March 1998 to February 2002.

This judgment clarifies that interest on delayed refunds is applicable under Section 11BB of the Central Excise Act, 1944, even for pre-deposits made during investigations. The decision in Galaxy Entertainment Corpn. Ltd. case establishes the precedent for granting interest on delayed refunds, ensuring timely and fair treatment for taxpayers in such situations.