2007 (8) TMI 230 - AT - Central Excise

Interest on delayed refund Dept. took nearly 6 yrs for sanction of refund While calculating the interest, the date of original claim should be taken Interest should be paid to assessee, section 11BB explains that interest commences from 3 months after date of filing of claim

Summary

Issues:
1. Refund claim rejection by lower authorities.
2. Application for interest under Section 11(BB) of the Central Excise Act rejected.
3. Calculation of interest on delayed refund payment.
4. Interpretation of Section 11BB for interest calculation.
5. Precedents related to delayed refund payment and interest.

Analysis:
1. The appeal was filed against the rejection of the refund claim by the lower authorities. The appellants, manufacturers of M.S. ingots, billets, etc., under a compounded levy scheme, claimed a refund due to the non-functioning of their unit for a certain period. The CEGAT remanded the case to the original authorities, who eventually allowed the abatement, leading to the refund being granted to the appellants. However, the claim for interest under Section 11(BB) was rejected by the Assistant Commissioner, stating that since the refund was granted within 3 months from the date of the application, there was no delay.

2. The rejection of the interest claim was based on the argument that the refund was sanctioned within 3 months from the date of application, thus no delay occurred. The appellants contended that the department took nearly 6 years to sanction the refund, during which the money due to them was held by the government. The Tribunal agreed with the appellants, emphasizing that interest calculation should consider the original claim date. The explanation to Section 11BB clarified that interest would be calculated from three months after the date of the refund claim.

3. Citing the case of J.K. Cement Works v. Assistant Commissioner Central Excise, it was highlighted that delayed payment of refund should not deprive the applicant of interest. The Tribunal noted that despite the claims being filed in 1997 and a prolonged legal process, the refund was sanctioned only in 2003. Relying on the interpretation of Section 11BB in the case of Jayanta Glass Ltd. v. Commissioner of Central Excise Calcutta, the Tribunal concluded that interest should commence from 3 months after the filing of the claim.

4. The Tribunal's decision was based on the understanding that Section 11BB applies in cases of delayed refund payments, and interest calculation should start from three months after the claim filing date. This interpretation aligns with established precedents and ensures that delayed refunds do not unjustly deprive applicants of interest on the amount rightfully due to them.

5. In conclusion, the Tribunal allowed the appeal for consequential relief, emphasizing the importance of timely refund payments and the entitlement of applicants to interest on delayed refunds as per the provisions of Section 11BB and relevant legal precedents.