2017 (5) TMI 1295 - AT - Central Excise

Entitlement to interest - Refund claim - rejection/transfer to Consumer Welfare Fund on the ground of unjust enrichment - Held that - the appellant cannot be deprived the right to claim interest even though the amount was transferred to Consumer Welfare Fund for no fault of theirs - the appellants are accordingly entitled to interest on the refund amount after expiry of three months from the date of application i.e. from 5.1.2007 till the amount was sanctioned to the appellant - appeal allowed - decided against appellant.

Summary

Issues:
- Refund claim rejection on grounds of unjust enrichment
- Entitlement to interest on the refund amount
- Applicability of time limitation for filing refund claim

Analysis:

Issue 1: Refund claim rejection on grounds of unjust enrichment
The appellant filed a refund claim after a favorable decision by the Tribunal. The claim was initially rejected by the adjudicating authority citing unjust enrichment. However, the Commissioner (Appeals) overturned this decision after reviewing the evidence, stating that the burden of duty had not been passed on by the appellant. Despite the refund claim being transferred to the Consumer Welfare Fund, the appellant's right to claim interest was upheld based on the judgment of the Hon'ble Gujarat High Court in a similar case.

Issue 2: Entitlement to interest on the refund amount
The appellant contended that they were entitled to interest on the refund amount as per Section 11BB of the Central Excise Act, 1944. Citing the principle established by the Hon'ble Supreme Court in a specific case, the appellant argued for interest from the date of application till the disbursement of the refund amount. The Tribunal agreed with this argument, emphasizing that interest accrues from the expiry of three months from the application date.

Issue 3: Applicability of time limitation for filing refund claim
The Revenue argued that the refund claim was time-barred as it was filed after one year from the Tribunal's order. They referenced a Supreme Court judgment to support their stance. However, the appellant countered this by citing a judgment of the Hon'ble Kerala High Court, stating that there is no limitation of one year for claiming a refund when duty is paid under protest. The Tribunal found the Supreme Court judgment inapplicable to the present case due to the timely filing of the refund claim after the Tribunal's decision.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and ruling in favor of the appellant's entitlement to interest on the refund amount. The decision was based on the interpretation of Section 11BB of the Central Excise Act, 1944 and relevant judicial precedents, emphasizing the appellant's right to interest from the date of application till the refund amount was sanctioned.