2008 (3) TMI 191 - AT - Central Excise

Interest on delayed refund - where there is delay of refund with reference to the date of the refund claim, interest shall be paid to the claimant under Section 11BB of the Act from the date immediately after the expiry of three months from the date of filing of the refund application till the date of actual refund date on which refund was allowed is not relevant

Summary

Issues:
1. Whether interest is payable under Section 11BB of the Central Excise Act on the duty refunded to the respondents.

Analysis:
1. The central issue in this appeal before the Appellate Tribunal CESTAT, CHENNAI was whether interest is payable to the respondents on the duty refunded to them in accordance with the order of the Commissioner (Appeals) under Section 11BB of the Central Excise Act. The claim for duty refund was initially rejected by the original authority but later allowed by the learned Commissioner (Appeals) with interest under Section 11BB from the date after three months from the date of the claim. The Revenue contended that interest should only be paid from the date after three months from the date on which the refund claim was allowed by the Commissioner (Appeals). However, the Tribunal held that in cases where a refund claim is rejected by the original authority and subsequently allowed by the appellate authority or the Tribunal, interest under Section 11BB is payable from the date immediately after the expiry of three months from the date of filing the refund application until the actual refund is made. The Tribunal cited the legal position established in the Larger Bench decision of Jayanta Glass Ltd. v. Commissioner of Central Excise, Kolkata to support its conclusion.

2. The Tribunal emphasized that when an appellate order allows a refund claim that was initially rejected, it is deemed to be an order passed under sub-section (2) of Section 11B of the Act. This deems the delay in refund from the date of the claim to be eligible for interest under Section 11BB. Therefore, the Tribunal upheld the decision of the Commissioner (Appeals) to grant interest on the refunded duty from the date immediately after the expiry of three months from the date of filing the refund application until the actual refund is made. Consequently, the Tribunal found the Revenue's argument unsustainable and dismissed the appeal, affirming the correctness of the Commissioner's decision.

3. In conclusion, the Appellate Tribunal CESTAT, CHENNAI, through its judgment, clarified the applicability of interest under Section 11BB of the Central Excise Act in cases where a refund claim is rejected by the original authority but later allowed by the appellate authority. The Tribunal's decision aligned with established legal principles and the interpretation of relevant provisions, ensuring that the claimant is entitled to interest on the refunded duty for the period of delay in the refund process.