2017 (6) TMI 762 - AT - Central Excise

Interest on delayed cash refund - relevant date for calculation of interest - Section 11BB of the CEA, 1944 - Held that - the issue is no more res integra as decided in the case of COMMISSIONER OF CENTRAL EXCISE Versus RELIANCE INDUSTRIES LTD. 2010 (10) TMI 190 - GUJARAT HIGH COURT , where it was held that as per the instructions issued by the Central Government refunds under Rule 57F of the erstwhile Central Excise Rules, 1944 would be governed by the provisions of Section 11BB of the Act. Rule 57F of the said Rules made provision for the manner of utilisation of inputs and credit allowed in respect of duty paid thereon. Sub-rule (13) of rule 57F made provision for refund of accumulated credit in case where for any reason it was not possible to adjust the same in the manner provided under the said sub-rule - the Appellant are eligible to interest on the refund amount of ₹ 54,38,980/- from the date of expiry of three months of filing the respective claim - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of interest under Section 11BB of the CEA, 1944 on delayed refund claims filed under Rule 5 of CENVAT Credit Rules, 2004.
- Admissibility of interest on the interest amount claimed by the Appellant.

Analysis:
1. Eligibility of Interest under Section 11BB: The main issue in this case was the eligibility of interest under Section 11BB of the CEA, 1944 on delayed refund claims filed under Rule 5 of CENVAT Credit Rules, 2004. The Appellant had filed quarterly refund claims amounting to &8377; 70,21,422/-, out of which &8377; 54,38,980/- was sanctioned with significant delay. The Appellant claimed interest on the delayed amount citing the judgment of the Hon'ble Gujarat High Court in a similar case. The Tribunal referred to the precedent and held that the provisions of Section 11BB were applicable, and the Appellant was entitled to interest on the delayed refund amount from the date of expiry of three months from filing the claim.

2. Admissibility of Interest on Interest Amount: The Appellant also claimed interest on the interest amount, which was contested by the Revenue. The Revenue argued that there was no provision to allow interest on the interest amount. In support of their argument, they referred to a judgment of the Larger Bench of the Tribunal. The Tribunal agreed with the Revenue's contention and held that interest on the interest amount was not admissible. The Tribunal cited the Larger Bench decision and modified the impugned order accordingly, allowing the appeal only to the extent of granting interest on the delayed refund amount as per Section 11BB.

In conclusion, the Tribunal ruled in favor of the Appellant regarding the eligibility of interest under Section 11BB of the CEA, 1944 on the delayed refund amount. However, the Tribunal rejected the claim for interest on the interest amount, citing a precedent from a Larger Bench decision. The appeal was allowed to the extent of granting interest on the delayed refund amount as per the applicable provisions.