2015 (10) TMI 511 - AT - Central Excise

Delay in sanction of refund claim - Demand of interest - Held that - If a refund claim is not paid within 3 months from the date of its receipt then interest at prescribed rates become payable from the date of completion of 3 months till the same is paid. In the present case, a refund amount of ₹ 1,91,250.00 was appropriated with respect to some confirmed dues which was later on set aside. For this amount of ₹ 1,91,250.00 refund claim earlier filed was appropriated which was not held proper. In the present factual matrix, interest on the amount of ₹ 1,91,250.00 will become due from completion of 3 months from the date of refund claim originally filed under Section 11BB of the Central Excise Act, 1944. There is no scope for postponement of payment of interest after completion of 3 months from the date of filing the refund claim. Appellant s claim regarding interest from completion of 3 months from filing of first refund claim is allowed. Amounts paid at the time of investigation cannot be denied interest on the grounds that the amount paid was not duty and not entitled to interest. Similarly, in the case of CCE Kanpur Vs Kothari Products Ltd (supra) CESTAT Delhi held that interest has to be paid on delayed sanction of refund on account of penalty and interest when appropriated earlier. - Decided in favour of assessee.

Summary

Issues:
1. Delay in payment of interest on refunds.
2. Applicability of interest on amounts paid during investigation.
3. Interpretation of Section 11BB of the Central Excise Act, 1944.

Analysis:
1. Delay in Payment of Interest on Refunds:
The Appellant filed an appeal against the order upholding the refund claim without interest for late sanction. The Appellant contended that interest under Section 11BB of the Central Excise Act, 1944 should be paid after 3 months from the date of receipt of the refund claim or after 3 months from the date of an order on an issue decided by the Appellate authority in favor of the assessee. The Appellant sought a refund of the amount due, including interest. The Tribunal agreed with the Appellant's argument, stating that interest on the refund amount will become due from the completion of 3 months from the date of the original refund claim. The Tribunal emphasized that there is no scope for postponement of interest payment after the completion of 3 months from the filing of the refund claim. Therefore, the Appellant's claim for interest from the completion of 3 months from the filing of the first refund claim was allowed.

2. Applicability of Interest on Amounts Paid During Investigation:
The Tribunal addressed the issue of interest on amounts paid during an investigation by Revenue. Referring to case laws, the Tribunal noted that interest accrues from 3 months after the settlement of the dispute related to the investigation. The Tribunal cited the decision in CCE Hyderabad Vs ITC Ltd, stating that interest starts accruing to the Appellant 3 months after the dispute settlement. Additionally, the Tribunal highlighted rulings such as M/s Bipin Silk Synthetics Vs CCE Mumbai-V and CCE Kanpur Vs Kothari Products Ltd, emphasizing that amounts paid during investigations are entitled to interest. The Tribunal concluded that interest must be paid on delayed sanction of refunds related to penalty and interest when appropriated earlier.

3. Interpretation of Section 11BB of the Central Excise Act, 1944:
The Tribunal analyzed Section 11BB of the Central Excise Act, 1944, which pertains to interest on delayed refunds. The provision mandates that if a refund claim is not paid within 3 months from its receipt, interest becomes payable at prescribed rates from the completion of 3 months until the refund is made. The Tribunal applied this provision to the case, emphasizing that interest on the refund amount is due from the completion of 3 months from the original refund claim date. By interpreting and applying Section 11BB, the Tribunal ensured that the Appellant received the interest rightfully due.

In conclusion, the Tribunal allowed the appeal filed by the Appellant concerning the delay in interest payment on refunds and the applicability of interest on amounts paid during the investigation, providing consequential relief as deemed appropriate.