2016 (11) TMI 148 - AT - Central Excise

Interest on delayed refund - 100% EOU - Held that - the issue is no more res integra as settled by the Tribunal in the case of M/s Hero Motors Ltd Vs Commissioner, Gaziabad 2014 2014 (7) TMI 482 - CESTAT NEW DELHI - Clause (c) of Proviso to section 11B(2) refers to the refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued under the Central Excise Act, 1944 , as the refund claim not hit by the principle of unjust enrichment - Decided in favor of the assessee.

Summary

Issues involved:
Appeal against order allowing interest on delayed refund under Rule 5 of CENVAT Credit Rules 2004.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad was filed by the Revenue challenging the order passed by the Commissioner (Appeals), which allowed interest on a delayed refund under Rule 5 of CENVAT Credit Rules 2004. The appellant, a 100% EOU engaged in manufacturing excisable goods, filed three refund claims for accumulated CENVAT Credit for the period April 2009 to September 2010. The Adjudicating authority sanctioned an amount of ?4,99,039, but the Appellants were aggrieved by the non-allowance of interest for the delayed period, leading to the appeal before the Commissioner (Appeals), who ruled in favor of the Appellants, prompting the Revenue to file the present appeal.

The learned Authorised Representative for the Revenue argued that the Commissioner (Appeals) erred in allowing interest on the delayed refund under Rule 5 of CENVAT Credit Rules 2004. It was contended that interest payment is governed by Section 11BB of the Central Excise Act, 1944, and any refund falling under Section 11B would qualify for interest under Section 11BB. However, the Tribunal, citing the case of M/s Hero Motors Ltd Vs Commissioner, Ghaziabad, held that refunds under Rule 5 are eligible for interest under Section 11BB of the Act. The Tribunal emphasized that the refund under Rule 5 involves the cash refund of accumulated CENVAT credit, which is akin to the refund mentioned in Section 11B, making the provisions of Section 11BB applicable. The Tribunal's decision was based on the rationale that Section 11B covers the refund of CENVAT credit mentioned in the proviso to Section 11B, thereby extending the applicability of Section 11BB to refund claims filed under Rule 5 of CENVAT Credit Rules 2004.

In conclusion, the Appellate Tribunal, after considering the arguments and the precedent set by the Tribunal in the case of M/s Hero Motors Ltd, rejected the Revenue's appeal as devoid of merit. The Tribunal upheld the decision of the Commissioner (Appeals) to allow interest on the delayed refund under Rule 5 of CENVAT Credit Rules 2004, in line with the provisions of Section 11BB of the Central Excise Act, 1944.