2016 (1) TMI 289 - AT - Central Excise

Claim of interest on delayed refund - finalization of provisional assessment - period of limitation - appellant filed the refund claim on 11.8.1998 without prejudice basis under Rule 9B(5) of the Central Excise Rules, 1944 on the ground that appellant is not required to file refund claim under Rule 9B(5) of the Rules as per various judicial pronouncements. - Held that - Admittedly, in this case, the order dated 7.7.98 of finalization of provisional assessment was challenged by the Revenue before learned Commissioner (Appeals) which attained finality on 30.5.2001, therefore, refund claim is governed by section 11B of the Central Excise Act, 1944. At this stage, the learned Counsel for the appellant have conceded their claim of interest for the period prior to 30.5.2001. We have held that the refund claim is governed by section 11B of the Central Excise Act, 1944 as discussed hereinabove, in that circumstances, the appellant is entitled for interest on delayed refund after three months from the date i.e. 30.5.2001 when the claim of refund has attained finality till the refund claim was given to the appellant. - Decided in favor of assessee.

Summary

Issues:
Appeal against denial of interest on delayed refund.

Analysis:
The appellant adopted provisional clearance method during 1994-1995, leading to a refund of 91.13 lakhs finalized on 7.7.98. The appellant filed a refund claim on 11.8.1998 under Rule 9B(5) of the Central Excise Rules, 1944. The Revenue appealed against the finalization of provisional assessment, resulting in a refund of 72.28 lakhs for the appellant. Despite filing reminder and show cause notices, interest on the refund was rejected, and the refund was given without interest on 7.4.2003. The appellant contested the denial of interest before the Commissioner (Appeals) and subsequently before the tribunal.

The appellant argued that interest should be granted for delayed refund post finalization of assessments on 7.7.98, as the appellant was directed to file a refund claim under section 11B of the Act. The appellant also cited relevant circulars to support their claim for interest. However, the Revenue contended that section 11B did not apply to refund claims under Rule 9B(5) and that retrospective implementation of certain notifications was not valid.

The tribunal noted that the final order on provisional assessment was challenged by the Revenue and decided on 30.5.2001, confirming the refund for the appellant. Referring to legal precedents, the tribunal determined that the refund claim fell under section 11B due to the challenge by the Revenue, making the appellant eligible for interest post finality of the refund order on 30.5.2001. Consequently, the tribunal ruled in favor of the appellant, granting interest on the delayed refund from three months after 30.5.2001 until the refund was provided on 7.4.2003.

In conclusion, the tribunal held that the appellant was entitled to interest on the delayed refund post finalization of assessments on 7.7.98, as the refund claim was governed by section 11B following the challenge by the Revenue. The appeal was thus disposed of in favor of the appellant, ordering the payment of interest for the specified period.