2015 (10) TMI 1805 - AT - Central Excise

Refund claim of amount paid as interest - Denial on the ground that there is no enabling legal provision for grant of refund of interest and in the absence of such provisions no refund claim for interest can be considered - Held that - No doubt there is no provision in the Section 11B of Central Excise Act 1944 specifically providing for refund of interest paid by an assessee. However I find taking note of the lack of provision in Section 11B for such refund, this Tribunal in the case of Mothersons Sumi Systems Ltd. 2006 (8) TMI 75 - CESTAT, NEW DELHI , took a view that the amount has to be refunded. - the appellant is eligible for the refund. The fact remains that whether unjust enrichment would be attracted and whether the appellants have crossed the threshold has not been examined or considered by both the lower authorities. Therefore I consider it appropriate that matter should be remanded for the limited purpose of examination of applicability of unjust enrichment. Accordingly the impugned order is set aside and the matter is remanded to the original adjudicating authority - Decided in favour of assessee.

Summary

Issues:
1. Refund claim of interest amount under central excise duty.
2. Legal provision for grant of refund of interest.
3. Applicability of unjust enrichment in the refund claim.

Analysis:
1. The case involved a refund claim for interest amount under central excise duty. The appellants had paid the differential duty and interest, which was collected from a third party. The refund application was filed solely for the interest amount of Rs. 4,31,213/-.

2. The refund claim was rejected citing the absence of a specific legal provision enabling the grant of refund of interest. The learned counsel for the appellants argued that the interest paid during the appeal process should be considered a deposit and refunded upon a favorable decision, referring to relevant case laws supporting their stance.

3. The Tribunal acknowledged the absence of a provision in Section 11B of the Central Excise Act, 1944 for refund of interest. However, it noted a previous decision where the Tribunal ruled that interest, once collected and not to be recovered, should be refunded to the assessee. The Tribunal emphasized that the lack of statutory provisions should not hinder refund in cases of wrongly collected amounts.

4. While distinguishing other cases related to fine and penalty refunds, the Tribunal considered the precedent supporting the appellant's claim and remanded the matter to the original adjudicating authority to examine the applicability of unjust enrichment. The decision highlighted the need to assess whether the appellants had crossed the threshold for unjust enrichment before granting the refund.

5. The Tribunal set aside the impugned order and directed a fresh consideration of the refund claim solely to determine the applicability of unjust enrichment. The decision aimed to ensure a comprehensive review of the refund request in light of the legal principles governing the refund of interest amounts under central excise duty.

This detailed analysis encapsulates the key legal aspects and considerations addressed in the judgment regarding the refund claim of interest amount under central excise duty, the absence of a specific legal provision for such refunds, and the necessity to assess unjust enrichment before granting the refund.