2017 (2) TMI 523 - AT - Customs

Interest on delayed refund - Revenue claim that the refund is being made within three months from the date receipt of Final Order of Honorable High Court and therefore there is no delay on the part of Department to refund the amount - Held that - the appellants are eligible for interest after three months from the date of filing the refund application 29.05.2001 - the appellant is eligible for interest on the refund amount from 29.08.2001 onwards till the payment of refund 20.10.2009 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of interest on delayed refund.

Analysis:
The appellant, engaged in manufacturing, imported Sulphuric Acid and mistakenly paid duty on it. Upon realizing their eligibility for concessional duty, they filed a refund application on 29.05.2001 for ?42,19,742. Initially, the refund was rejected, but after subsequent appeals, the Commissioner (Appeals) allowed the refund. However, the Department continued to contest the matter, leading to appeals before the Tribunal and the High Court of Andhra Pradesh, both of which ruled in favor of the appellant. Subsequently, the original authority allowed the refund but denied interest on the basis that the refund was made promptly after the High Court's final order.

The appellant appealed this decision, arguing that interest should be granted from three months after the date of the refund application. The Commissioner (Appeals) granted interest from 01.07.2008, based on the period after the second round of appeal on 31.03.2008. The appellant contended that no interest had been paid to date. In response, the Department reiterated the findings in the impugned order.

Considering the submissions and legal precedents, the Member (Judicial) referred to Section 11B of the Central Excise Act, 1944, and the decisions in the cases of Ranbaxy Laboratories Ltd. and Pfizer Products India Pvt. Ltd. The Member held that interest becomes payable if the amount is not refunded within three months from the date of the application. Citing the interpretations from the cases, it was concluded that interest liability arises three months after the refund application, not from the date of the Tribunal or Court order. Therefore, the appellant was deemed eligible for interest from 29.08.2001 onwards until the refund payment on 20.10.2009. The impugned order was set aside, and the appeal was allowed with any consequential reliefs.

In conclusion, the Tribunal ruled in favor of the appellant, granting interest on the refund amount from the appropriate date as per legal provisions and precedents, overturning the decision that denied interest based on the promptness of the refund after the High Court's order.