2019 (11) TMI 1609 - AT - Customs

Interest on delayed refund - relevant date for the award of interest on the sanctioned refund as to whether it should be the date of filing of application which is 05.02.2005 in the present case or it should be the date of application as was filed after passing of the order sanctioning refund which is on 01.08.2017 in the present case - HELD THAT - The claim of refund of duty has been detailed under section 11B and 11BB of Central Excise Act, 1944. Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below the proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise but by an appellate authority or the court, then for the purpose of this section the order made by such higher appellate authority or by the court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. Thus, it is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. The issue in fact was initially taken up by Hon ble Supreme Court in the case of UNION OF INDIA ANR. VERSUS SHREEJI COLOUR CHEM INDUSTRIES 2008 (9) TMI 12 - SUPREME COURT wherein it was held that in so far as the reckoning of period for the purpose of payment of interest under section 11BB of Central Excise Act is concerned, emphasis has been laid on the date of receipt of application for refund. Not only this Department s own circular No.670/61/2002-CX dated 01.10.2002 states that the relevant date for payment of interest in refund cases is the expiry of three months from the date of receipt of application under section 11B (1) of the Act. In the present case, the application for refund under Section 11B of CEA was filed on 05.02.2005. The final order of CESTAT dated 01.08.2017 has reverted the situation back to the date of application dated 05.02.2005. Hence, appellant is entitled for interest on refund from the date of his application i.e. 05.02.2005 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim of interest on the refund allowed to the appellant.

Analysis:
The appellant, M/s. Hindustan Motors, filed a refund claim for customs duty paid under protest, which was initially rejected by the Deputy Commissioner. However, the Order-in-Appeal set aside the rejection, allowing the refund. Subsequently, the appellant applied for interest on the refund amount, which was denied by the Original Adjudicating Authority and upheld in the Order-in-Appeal under challenge, leading to the current appeal.

The main issue in the case revolved around determining the relevant date for the award of interest on the sanctioned refund. The appellant argued that interest should be calculated from the date of the original refund application in 2005, citing relevant legal precedents such as the decision in Ranbaxy Laboratories Ltd. vs. Union of India. On the other hand, the Department justified its decision based on Section 27(2) of the Customs Act, 1962.

After considering the arguments from both parties and analyzing the legal provisions, the Tribunal concluded that interest on the refund should be calculated from the date of the original refund application in 2005. The Tribunal referenced previous judgments, including the case of Union of India vs. Shreeji Colour Chem Industries and M/s. Om Refoils Ltd. vs. Union of India, to support their decision. These cases clarified that interest should be paid from the date of the application for refund under the relevant provisions of the law.

Based on the legal principles and precedents discussed, the Tribunal found that the adjudicating authorities had erred in denying the appellant's entitlement to interest on the refund claim. Therefore, the Tribunal set aside the order under challenge and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal's decision emphasized the importance of adhering to judicial precedents and legal provisions in determining the entitlement to interest on sanctioned refunds. The judgment clarified the relevant date for calculating interest on refunds and upheld the appellant's right to receive interest from the date of the original refund application in 2005.