2017 (4) TMI 890 - AT - Central Excise

Interest on delayed refund - whether the appellant is entitle for the interest on the refund of duty @ 12% on the delay sanction of refund in respect of pre-deposit of ₹ 1 crore consequent to setting aside the order appealed and remand of the matter to the Commissioner for re-computation of the demand? - Held that - demand was not finally decided by this tribunal - The demand was very much existing at the time of passing Tribunal order for the reason that re-quantification was directed to the original adjudicating authority. Therefore in the present case it cannot be said that there is delay on the part of the department in sanctioning of the refund claim - appellant is not entitled to any interest - appeal dismissed - decided against appellant.

Summary

Issues involved:
Whether the appellant is entitled to interest on the refund of duty at 12% due to the delay in refund sanction after setting aside the order and remanding the matter for re-computation of the demand.

Analysis:
The appellant contended that a pre-deposit of ?1 crore was made during the appeal's pendency, and the Tribunal set aside the impugned order but remanded the matter for re-quantification of duty, entitling the appellant to a refund within three months from the Tribunal's order dated 5-3-2004. However, the refund was sanctioned almost 545 days later, leading to a claim for interest on the delay. The appellant argued that any delay in refund after appeal disposal warrants interest, citing relevant case laws like Premier Machinery Mfg. and Voltas Limited. On the contrary, the Revenue representative argued that since the appeal was not finally allowed by the Tribunal and the matter was sent for re-quantification, no immediate refund obligation arose, thus interest was not warranted.

The Member (Judicial) carefully considered both sides' submissions and the records. It was noted that the refund was sanctioned over a year after the Tribunal's order. While agreeing with the appellant's counsel that refunds should ideally be made within three months of appeal finalization, it was clarified that in this case, the demand was not conclusively decided by the Tribunal but remanded for re-quantification, delaying the refund obligation. The judgments cited by the appellant were deemed irrelevant as they pertained to cases where the appeal was finally allowed, unlike the present scenario where the demand still existed post-Tribunal order. The delay in refund sanctioning was not attributed to the department in this context. Consequently, the Commissioner (Appeals) order was upheld, and the appeal was dismissed.

This judgment highlights the distinction between cases where appeals are finally allowed, leading to immediate refund obligations, and scenarios where matters are remanded for further assessment, delaying the refund process until finalization. The decision underscores the importance of considering the specific circumstances of each case to determine the applicability of interest on delayed refunds.