2017 (2) TMI 303 - AT - Central Excise

Interest on delayed refund - whether the liability of Revenue to pay interest under Section 11BB of the Central Excise Act, 1944 commences from the date of expiry of three months, from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made? Held that - the liability of Revenue to pay interest under Section 11BB of the Central Excise Act, 1944 commences from the date of expiry of three months, from the date of receipt of application for refund under Section 11BB of the Central Excise Act, 1944 and not on the expiry of the said period from the date on which order of refund is made - the appellant entitled to refund of interest for the period, 07/03/2000 till 13/06/2005, the date on which refund was granted finally - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Classification of goods under Chapter 40 of the Central Excise Tariff Act, 1985
- Entitlement to interest on refund under Section 11BB of the Central Excise Act, 1944

Classification of Goods Issue:
The appellant, a manufacturer of Rubber Profiles & Weather Strips, filed a refund claim for duty paid on advance received from a client for prototypes. The claim was initially rejected, but on appeal, it was remanded for de-novo adjudication. The Assistant Commissioner later sanctioned the refund, stating that the amount was already included in finished goods. The appellant sought interest on the delayed refund, citing the case of Ranbaxy Laboratories Ltd. The Tribunal, following the Supreme Court ruling, held that interest under Section 11BB commences from the expiry of three months from the date of the refund application, not from the date of the refund order. The appellant was granted interest for the period until the refund was finally granted.

Entitlement to Interest on Refund Issue:
The main issue revolved around whether the appellant was entitled to interest on the refund under Section 11BB of the Central Excise Act, 1944. The appellant filed a claim for interest after the delay in granting the refund. The rejection of the interest claim was challenged before the Tribunal. The Tribunal, considering the Supreme Court ruling in the case of Ranbaxy Laboratories Ltd., held that the appellant was indeed entitled to interest for the period between the application date and the final refund date. The Tribunal directed the Adjudicating Authority to grant the interest within 90 days from the date of the order.

This judgment clarifies the commencement of the interest period for delayed refunds under Section 11BB of the Central Excise Act, 1944, based on the Supreme Court's interpretation. It emphasizes the importance of timely refund processing and the obligation of the Revenue to pay interest for delays. The ruling provides guidance on the calculation and entitlement to interest in such cases, ensuring fair treatment for taxpayers awaiting refunds.