2016 (10) TMI 273 - HC - Central Excise

Entitlement of interest w.e.f. 21.8.2008 on refund - whether @12% or 6% in terms of Section 11BB of the Act - amount of pre-deposit made by the assessee - amount is not refunded within three months from the date of passing of the order - Held that - part of the amount, was refunded to the appellant in January, 2009, whereas remaining part of the amount was refunded in April, 2009. As per the circular of the Government of India, Ministry of Finance No. 275/37/2K-CX.8A dated 2.1.2002, in case the amount is not refunded within three months from the date of passing of the order, the assessee is entitled to interest. No formal application is required to be filed. A simple letter is sufficient for the same. The application in the present case was filed by the appellant on 22.5.2008. There is error in the date noticed in the order passed by the authority for filing the application as 21.10.2008. Hon ble Supreme Court in the case of Commissioner of Central Excise, Hyderabad v. I.T.C. Ltd. 2004 (12) TMI 90 - SUPREME COURT OF INDIA allowed the refund along with interest @ 12% per annum. Therefore, the appellant herein is entitled to payment of interest @ 12% per annum for the period after three months till the refund was granted after passing of the order by the Tribunal on 2.5.2008. - Appeal disposed of

Summary

Issues:
Entitlement to interest w.e.f. 21.8.2008
Entitlement to interest @ 12% or 6% in terms of Section 11BB of the Act
Validity of Tribunal's findings

Analysis:
1. The appellant, engaged in manufacturing, faced excise duty and penalty issues from 1992 to 1996. After depositing the disputed amount, the Tribunal set aside the demand on 2.5.2008, entitling the appellant to a refund. The appellant claimed interest on the delayed refund.
2. The appellant cited legal precedents, including a Supreme Court judgment and Division Bench judgments, supporting the payment of interest post three months from the refund becoming due. The appellant argued for interest @ 12% per annum.
3. The respondent contended that the refund application was filed on 21.10.2008, and as the refund was partially made within three months, no interest was due. Alternatively, if any interest was payable, it should not exceed 6% per annum.
4. The High Court examined the facts and relevant legal provisions. It noted the circular allowing interest if the refund is delayed beyond three months from the order date. The appellant's refund application was filed on 22.5.2008, not 21.10.2008 as claimed.
5. Relying on the Supreme Court judgment, the High Court held that the appellant was entitled to interest @ 12% per annum post three months from the Tribunal's order on 2.5.2008 until the refund was granted. The Court found in favor of the appellant on all issues.
6. Consequently, the High Court disposed of the appeal, affirming the appellant's entitlement to interest at the rate of 12% per annum for the specified period until the refund was processed.