2017 (7) TMI 163 - AT - Central Excise

Rebate of NCCD AED and Education Cess - denial on the ground that the manufacturer located in the State of Jammu & Kashmir had taken Self Credit of the elements of NCCD AED and Education Cess under the scheme of N/N. 56/2002-CE - jurisdiction - Held that - Section 35B(1) Clause (b) excluded the appeals against orders relating to rebate of duty of excise. However as regard interest on rebate there is no exclusion provided in the said Section therefore this Tribunal has jurisdiction to decide the appeal on the issue of interest on delayed payment of rebate therefore the objection of the AR in this regard is hereby rejected. As regard the issue raised by the Ld. AR that the single member bench cannot heard the present appeal as the issue of rate of duty is involved. On careful perusal of the entire case paper I find that the issue involved in the present case is limited to the grant of interest on the refund which has already been sanctioned there is no issue of rate of duty or interpretation of N/N. 56/2002-CE is involved in the present case - the refund become payable only by virtue of Section 88 of the Finance Act 2008 by which Rule 18 was amended before that there was no occasion to grant the rebate to the appellant therefore there is no delay in sanction of the refund. If there is a delay in sanction of refund/rebate in terms of Section 11BB the interest is payable to the claimant after expiry of three months from the date of filing the refund application - In the present case the refund application was filed during the period February and April 2006 whereas the refund was sanctioned in June 2009. Therefore there is a delay after expiry of three months from the date of filing application accordingly the appellant is entitled for the interest in terms of Section 11BB. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act, 1944.
2. Jurisdiction of the Tribunal to hear the appeal regarding interest on rebate.
3. Applicability of retrospective amendment under Section 87 of the Finance Act, 2008.

Issue-wise Detailed Analysis:

1. Entitlement to Interest on Delayed Refund:
The appellant, a merchant exporter, filed a refund claim for excise duties paid on exported goods. The Assistant Commissioner initially granted a rebate for Basic Excise Duty and Special Excise Duty but rejected the rebate claims for NCCD, AED, and Education Cess. The Commissioner (Appeals) later held that the appellant was entitled to the rebate for these duties, and the Assistant Commissioner complied by sanctioning the rebate in June 2009. Since the refund claim was filed in February and April 2006, there was a delay in refunding the excise duties. Consequently, the appellant filed a claim for interest on the delayed refund under Section 11BB of the Central Excise Act, 1944. The Assistant Commissioner granted the interest, but the Revenue appealed, arguing that the rebate claims became admissible only due to the retrospective amendment of Rule 18 by Section 87 of the Finance Act, 2008, and thus, there was no delay in sanctioning the rebate. The Tribunal held that interest is payable for the period commencing after three months from the date of filing the application, as per Section 11BB, irrespective of the reasons for the delay. The Tribunal cited various judgments, including Ranbaxy Laboratories Ltd. and Focus Contrade Pvt. Ltd., which supported the appellant's entitlement to interest on delayed refunds.

2. Jurisdiction of the Tribunal:
The Revenue raised a preliminary objection, arguing that the Tribunal lacked jurisdiction to hear the appeal regarding interest on rebate, as per Section 35B(1) of the Central Excise Rules, 1944. However, the Tribunal referred to its decision in the case of Madura Coats Pvt. Ltd., which clarified that while Section 35B(1) excludes appeals against orders relating to rebate of duty of excise, it does not exclude appeals concerning interest on rebate. Therefore, the Tribunal has jurisdiction to decide the appeal on the issue of interest on delayed payment of rebate. Additionally, the Tribunal rejected the objection that the case should be heard by a Division Bench, as the issue involved was limited to the grant of interest on the refund already sanctioned, and did not involve the rate of duty or interpretation of Notification No. 56/2002-CE.

3. Applicability of Retrospective Amendment:
The Commissioner (Appeals) denied the interest on the ground that the refund became payable only by virtue of Section 87 of the Finance Act, 2008, which retrospectively amended Rule 18 of the Central Excise Rules, 2002. The Tribunal examined the retrospective amendment and concluded that the rebate sanctioned by the department was payable during the period from March 1, 2002, to December 7, 2006. Consequently, since there was a delay beyond three months from the date of filing the application, the interest was clearly payable to the appellant. The Tribunal emphasized that Section 11BB mandates the payment of interest after the expiry of three months from the date of filing the refund application, with no exceptions provided. Therefore, the delay in sanctioning the rebate claim, irrespective of the reasons, necessitated the payment of interest to the appellant.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order and upholding the order-in-original, thereby granting the appellant interest on the delayed refund under Section 11BB of the Central Excise Act, 1944. The Tribunal pronounced the judgment on June 19, 2017.

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