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2016 (3) TMI 1045 - AT - Central ExciseInterest on refund - refund claim sanction - Held that - The refund claim was filed on 17.12.2005 and the same was sanctioned within three months from the date of filing the refund claim and, therefore, as per Section 11BB, the assessee is not entitled to claim interest from the date when the alleged amount was deposited during investigation. As decided in Union of India & Others Versus M/s Hamdard (Waqf) Laboratories 2016 (3) TMI 68 - SUPREME COURT interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under Sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable - Decided against assessee
Issues Involved:
1. Entitlement to interest on refund. 2. Application of Section 11BB of the Central Excise Act, 1944. 3. Timeliness of refund processing. Issue-wise Detailed Analysis: 1. Entitlement to Interest on Refund: The primary issue revolves around whether the respondent is entitled to interest on the refund amount of Rs. 1,00,00,000/- paid during an investigation. The respondent claimed interest of Rs. 49,11,000/- alongside the refund, which was initially sanctioned by the Assistant Commissioner but without the interest. The Commissioner (Appeals) allowed the interest, leading to the department's appeal. 2. Application of Section 11BB of the Central Excise Act, 1944: Section 11BB stipulates that interest on delayed refunds is payable if the refund is not processed within three months from the date of the refund application. The department argued that since the refund was sanctioned within three months of the application (filed on 17.12.2005 and sanctioned on 16.3.2006), no interest was due. The respondent contended that interest should be paid from the date the amount was initially deposited during the investigation. 3. Timeliness of Refund Processing: The department maintained that the refund was processed within the statutory period of three months, thus negating the claim for interest. The Assistant Commissioner's decision to reject the interest claim was based on the timely refund processing as per Section 11BB. Tribunal's Findings: - The Tribunal noted that the refund claim was indeed filed on 17.12.2005 and sanctioned within three months on 16.3.2006. - The Tribunal emphasized that Section 11BB mandates interest only if the refund is delayed beyond three months from the date of the application. - It was highlighted that the Tribunal had not directed any interest payment in its initial order. - The Tribunal referenced the Supreme Court's ruling in UOI & Ors vs. Hamdard (Waqf) Laboratories, which clarified that interest under Section 11BB is payable from the expiry of three months from the refund application date, not from the date of the deposit during investigation. Conclusion: The Tribunal concluded that the respondent is not entitled to interest on the delayed refund since the refund was processed within the statutory three-month period. The order of the Commissioner (Appeals) was set aside, and the department's appeal was allowed, affirming that the refund was timely and interest was not warranted under Section 11BB. Final Order: The appeal by the department was allowed, and the order of the Commissioner (Appeals) granting interest on the refund was set aside, with the Tribunal ruling that the refund was processed within the required timeframe, thus negating the entitlement to interest.
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