2016 (5) TMI 9 - HC - Central Excise

Seeking direction for grant of interest - Deposited voluntarily till the date of actual payment under Section 11B of the Central Excise Act, 1944 - Appellant submitted that interest is due and payable from the date of the application seeking refund till the date of payment. Also once there is an order of refund of duty and which is traceable under sub-section (2) of Section 11B, then to the Applicant to whom this amount is not refunded within three months from the date of receipt of the application under sub-section (1) of that Section, there shall be paid interest not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government by notification in the Official Gazette. Held that - once the Assistant Commissioner approached the matter in terms of Section 11B of the Act but the amount as directed to be refunded was not refunded within the time provided by the statutory provision, that, this is a fit case to award interest that is to be awarded for delayed refund. If the duty ordered to be refunded under sub-section (2) of Section 11B is not refunded within three months from the date of receipt of the application under subsection (1) of Section 11B of the Act, then, the award of interest must follow as mandated by Section 11BB(1) of the Central Excise Act, 1944. In the present case, the application made for refund under Section 11B is dated 4th October 2006. The amount of refund as directed in terms of the order dated 28th April 2015 has been disbursed and paid on 28th April 2015 by RTGS. Therefore, the Petitioners are entitled to interest at the rate of 6% from the expiry of the period of three months from the date of the application, meaning thereby the amount shall carry interest at the rate of 6% per annum from 4th January 2007 to 27th April 2015. - Decided in favour of assessee.

Summary

Issues: Petition under Article 226 seeking interest on a sum deposited under Central Excise Act, 1944.

Analysis:
1. The petitioners sought a Writ of Mandamus or any appropriate order for interest on a sum deposited under Section 11B of the Central Excise Act, 1944. The petitioner contended that interest was due from the date of the refund application till the actual payment.

2. The legal basis for claiming interest was Section 11BB of the Act, which mandates interest on delayed refunds not paid within three months from the date of the refund application. The interest rate is set by the Central Government and ranges from 5% to 30% per annum. The petitioner argued that the refund was granted under Section 11B, and thus, interest on delayed refund should be paid as per Section 11BB.

3. The Revenue, on the other hand, argued that interest was not payable as the petitioner had not made a payment but had deposited the amount under an interim order of the Tribunal. The Revenue contended that since there was no duty payment, the interest claimed was not applicable, as stated in the Affidavit in Reply.

4. The Court examined the facts and found that the petitioner had voluntarily deposited the sum during an investigation process. The Assistant Commissioner's order confirmed the refund claim under Section 11B, but the refund was not disbursed within the stipulated time. The Court held that interest on delayed refund, as per Section 11BB(1) of the Act, was warranted in this case.

5. The Court rejected the Revenue's argument that the amount was not refunded due to a deposit and not a refund claim. The Court emphasized that once a refund is granted under Section 11B, the amount must be disbursed within the specified period. Since the refund was delayed, interest at the rate of 6% per annum was awarded from the expiry of three months from the date of the refund application until the actual payment date.

6. Ultimately, the Court made the rule absolute, directing the payment of interest at the specified rate from the due date until the actual payment date. The Court ordered the calculation and payment of the interest amount within two weeks from the date of the order, with no costs imposed on either party.