2015 (11) TMI 1421 - AT - Service Tax

Interest on delayed refund - Held that - Interest on delayed refund is payable under section 11BB of the Central Excise Act, 1944 on expiry of the period of three months from the date of receipt of application under section 11BB ibid and not from the date of order of refund or appellate order allowing such refund. - Supreme Court is the law of land and the same is to be followed by all the Courts of India as per Article 141 of Constitution of India, which provides that the law declared by Supreme Court shall be binding on all courts within the territory of India. Thus, following the decision of the Hon ble Supreme Court in the case of Ranbaxy Laboratories (2011 (10) TMI 16 - Supreme Court of India ), I hold that appellant is entitled to claim the interest for the period after three months from 2.8.2006 till 5.12.2012 - Decided in favour of assessee.

Summary

Issues:
1. Entitlement to interest on delayed refund claim under section 11BB of the Central Excise Act, 1944.

Analysis:
The appellant appealed against an order denying interest on a refunded amount they paid under protest. The appellant contended that they were entitled to interest as they filed the refund claim on 2.08.2006 and it was sanctioned on 5.12.2012. The main issue was whether the appellant was entitled to claim interest after three months from the date of filing the claim until the refund was sanctioned.

The appellant's counsel argued that as per section 11BB of the Central Excise Act, 1944, interest is payable after three months from the date of the refund claim until the refund is released. They cited precedents from the Hon'ble High Court of Bombay and the Supreme Court to support their argument.

On the other hand, the Revenue opposed the appellant's claim, stating that the refund claim was settled by the Tribunal on 18.4.2012, and the claim was filed on 10.9.2012, sanctioned on 5.12.2012. They argued that the question of interest did not arise as the claim was processed promptly. The Revenue relied on a decision of the Larger Bench of the Tribunal and questioned the applicability of the appellant's cited precedents.

After hearing both sides, the Tribunal noted that the appellant filed the initial refund claim on 1.8.2006, and the issue of entitlement to the refund was resolved on 18.4.2012. The Tribunal referred to the decision of the Supreme Court in Ranbaxy Laboratories Ltd., which clarified that interest under section 11BB accrues after three months from the date of the refund claim, not from the date of the refund order. The Tribunal held that the Supreme Court's decision is binding and ruled in favor of the appellant, granting them interest from 2.8.2006 to 5.12.2012. The appeal was allowed with any consequential relief.

In conclusion, the Tribunal upheld the appellant's entitlement to claim interest on the delayed refund under section 11BB of the Central Excise Act, 1944, following the precedent set by the Supreme Court in the case of Ranbaxy Laboratories Ltd. The decision emphasized the binding nature of Supreme Court rulings on all courts in India, settling the issue in favor of the appellant.