2015 (11) TMI 703 - AT - Central Excise

Interest claim - Delayed refund - whether, the appellant is eligible for interest in terms of Section 11BB of the Central Excise Act, 1944 for delayed sanction of refund amount beyond the period of three months from the date of filing the claim application - Held that - Refund application, complete in all respect was filed by the appellant on 20.10.2011 and documents namely, ER-I return and the copy of PLA for the relevant period subsequently desired by the Original Authority and submitted by the appellant pursuant to the remand direction by the Commissioner (Appeals), were all along available with the Departments. Further, I find from the grounds of appeal filed by the appellant that on examination of refund claim, the Range Officer vide letter dated 26.12.2011 had submitted a report to the refund sanctioning authority, stating that the refund claim is admissible to the appellant. Since, genuineness of such report of the Range Officer has not been questioned by the ld. DR for Revenue; I am of the firm view that the date of filing the refund application by the appellant on 20.10.2011 should be taken into consideration for the purpose of determination / computation of the interest liability. Therefore, in view of the fact that the refund application filed by the appellant on 20.10.2011 was ultimately entertained and sanctioned by the original authority on 31.08.2012, which is beyond the statutory time limit prescribed under section 11BB of the Central Excise Act, in my opinion, the appellant should be entitled for interest for the period beyond 3 months from the date of filing refund application, till the date of actual payment of refund amount. In other words, in this case, the appellant is entitled for interest - Decided in favour of assessee.

Summary

Issues:
1. Eligibility for interest under Section 11BB of the Central Excise Act, 1944 for delayed sanction of refund beyond three months.

Analysis:
The Tribunal considered whether the appellant was entitled to interest under Section 11BB of the Central Excise Act, 1944 for a delayed refund sanction. The appellant filed a refund application in October 2011, which was rejected due to missing documents. After an appeal, the refund was eventually allowed in August 2012. The main contention was whether the delay in sanctioning the refund warranted the payment of interest.

The appellant argued that the refund should have been sanctioned within three months of the application, and any delay beyond that period should attract interest. The appellant contended that all necessary documents were available with the Department, and no new information was gathered after the initial filing. The appellant also claimed that the unjust enrichment aspect was addressed in a previous order, confirming that excess duty was not passed on to customers.

On the other hand, the Revenue argued that since the refund was sanctioned within three months of receiving additional documents, there was no delay justifying interest payment. Section 11BB of the Act stipulates that if a refund is not issued within three months of application, the applicant is entitled to interest. The Tribunal noted that the refund application was complete when filed in October 2011, and subsequent documents requested were already in possession of the Department. A report from the Range Officer supported the admissibility of the refund claim. Therefore, the Tribunal concluded that interest should be paid for the period beyond three months from the date of the refund application until the actual payment in August 2012.

The Tribunal also addressed the unjust enrichment aspect, confirming that the double payment of duty was not recovered from customers based on previous findings accepted by the Department. Consequently, the Revenue's argument on this point was deemed unsustainable. The Tribunal allowed the appeal, directing the original authority to calculate and pay the interest amount in accordance with Section 11BB of the Act to the appellant.