2017 (8) TMI 312 - HC - Central Excise

Entitlement of interest - delayed grant of refund - Held that - There was delay in sanctioning the refund claim from three months after 27 September 2004 to 9 March 2006. The entitlement of interest, therefore, decided and by the impugned order the Respondent s Appeal was allowed. The Supreme Court in Union of India Vs. Hamdard (WAQF) Laboratories 2016 (3) TMI 68 - SUPREME COURT , while dealing with the interest of delayed refund is payable under Section 11BB of the Central Excise Act on expiry of three months from date of receipt of application from such date till date of refund of duty, has held that 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 under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Payment of interest for delay in sanctioning refund claims under the Central Excise Act, 1944.

Analysis:
1. The appeal was filed under Section 35G of the Central Excise Act, challenging the payment of interest to the respondent for a specific period due to delays in refund claims. The primary question raised was whether interest is payable for a particular period when relevant documents were not submitted along with the original refund claim, which was subsequently revised and sanctioned. The appellant, dissatisfied with the order of the Appellate Tribunal in favor of the respondent, brought the appeal to the High Court.

2. The core issue in the appeal revolved around the delay in sanctioning the respondent's refund claims and the subsequent entitlement to interest for the same. The parties' counsels extensively discussed the facts and legal provisions, particularly Section 11BB of the Excise Act and Rule 5 of the Cenvat Credit Rules, 2004. The refund application was initially filed in 2004 and eventually sanctioned in 2006, with part of the amount rejected as time-barred. The delay in processing the refund claim was acknowledged, and the interest entitlement was determined based on the applicable provisions and notifications.

3. Referring to relevant legal precedents, including the Supreme Court's decision in Union of India Vs. Hamdard Laboratories, the High Court emphasized the obligation on the revenue department to address deficiencies in refund applications promptly. The court highlighted the need for timely adjudication within three months and cited a judgment from the Gujarat High Court to support the interpretation of CENVAT credit rules and duty payment components.

4. In light of the legal principles and precedents cited, the High Court concluded that there was no merit in the appellant's arguments challenging the interest payment to the respondent. The court dismissed the revenue appeal, stating that there was no substantial question of law involved in the matter. The decision was based on a comprehensive analysis of the facts, legal provisions, and relevant judicial interpretations, ultimately upholding the Appellate Tribunal's order in favor of the respondent.