2017 (4) TMI 223 - HC - Central Excise

Entitlement of interest - the date from which the petitioners would be entitled to interest on delayed payment of rebate - whether the liability of the revenue to pay interest under section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the period from the date on which the order of refund is made - Held that - the issue is no longer res integra and stands decided by the Supreme Court in the case of Ranbaxy Laboratories Ltd. v. Union of India 2011 (10) TMI 16 - Supreme Court of India wherein, the court has held that liability of the revenue to pay interest u/s 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund u/s 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. . The respondent authorities are, therefore, not justified in refusing to grant interest on the rebate claims made by the petitioners in accordance with law laid down by the Supreme Court in Ranbaxy Laboratories Ltd. v. Union of India and hence, the petitions deserve to be allowed in terms of the relief prayed for by the petitioners. Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act, 1944.
2. Date from which interest on delayed refund should commence.

Detailed Analysis:

1. Entitlement to Interest on Delayed Refund:
The petitioners exported 102 consignments of Pan Masala and claimed a rebate/refund of excise duties amounting to ?3,30,09,140/-. The adjudicating authority initially rejected these claims, but the Commissioner (Appeals) later allowed them. Despite this, the rebate was delayed, leading the petitioners to seek interest on the delayed refund under Section 11BB of the Central Excise Act, 1944. The adjudicating authority, however, did not address the interest claim, prompting the petitioners to approach the court.

2. Date from which Interest on Delayed Refund Should Commence:
The core issue was determining the commencement date for interest on delayed refunds. The petitioners argued that interest should be calculated from three months after the date of the refund application, as per Section 11BB. The respondents contended that since the rebate was processed within the four-month period stipulated by the court, no interest was due.

The court referred to the Supreme Court's decision in Ranbaxy Laboratories Ltd. v. Union of India, which clarified that interest under Section 11BB becomes payable from the date of expiry of three months from the receipt of the refund application, not from the date of the refund order. The court emphasized that the statutory period prescribed under Section 11BB cannot be curtailed by any subsequent court order specifying a different timeframe for processing the refund.

Judgment:
The court held that the petitioners were entitled to interest on the delayed refund from the date of expiry of three months from the receipt of the refund application. The respondents' argument that the rebate was processed within the court-stipulated period was rejected. The court directed the respondents to pay the interest on the delayed refund within four weeks, reiterating the need for authorities to follow the Supreme Court's interpretation of legal provisions to avoid unnecessary litigation and undue harassment of assessees.

Conclusion:
The court allowed the petitions, directing the respondents to pay interest on the delayed refund in accordance with the law laid down by the Supreme Court, thereby upholding the petitioners' entitlement to interest from the date specified under Section 11BB of the Central Excise Act, 1944.