2009 (3) TMI 150 - AT - Central Excise

Refund of duty paid on Diamond Kits - M/s. TI Diamond Chain Ltd., Ambattur (TIDC) packed duty paid chain, connecting links and bought out sprocket in a special packing and sold each as kit (diamond kits) - TIDC paid central excise duty of Rs. 1,37,13,435/- on these diamond kits under protest later it was held that the diamond kits were not exciable TIDC claimed refund held that - original authority noted that the price of diamond kits before and after introduction of central excise duty remained the same and it was incorrect to hold that duty paid had been passed on - stock transferred goods carried the endorsement excise duty paid under protest not collectable/recoverable from customers - original authority erred in holding that any part of the amount claimed attracted the vice of unjust enrichment - appellants are eligible for interest for the period of delay in sanction of refund in terms of Section 11B of the Central Excise Act, 1944

Issues:
1. Refund of central excise duty paid on diamond kits.
2. Rejection of refund claims for specific amounts.
3. Claim for interest on refund amounts.
4. Delay in sanctioning the refund and eligibility for interest.

Analysis:
1. Refund of Central Excise Duty on Diamond Kits:
The case involved M/s. TI Diamond Chain Ltd. (TIDC) paying central excise duty on diamond kits under protest. The Tribunal previously held that the packing of chain and connecting links with bought-out sprocket did not constitute a manufacturing process. TIDC claimed a refund of the excise duty paid. The original authority sanctioned a refund of Rs. 1,21,28,530/-, while Rs. 12,29,105/- was deposited in the Consumer Welfare Fund (CWF), and a claim of Rs. 3,55,800/- was disallowed. The Commissioner (Appeals) upheld the original authority's decision and rejected the appeal for interest under section 11BB of the Central Excise Act '44.

2. Rejection of Specific Refund Claims:
In appeal No. E/1158/2001, TIDC challenged the rejection of refund claims for specific amounts. The grounds raised included discrepancies in wholesale prices, admissible expenditures, and disallowed refund amounts related to unsold stock. During the hearing, TIDC withdrew the claim for Rs. 3,55,800/-. The Tribunal found that the authorities wrongly assumed TIDC had collected the impugned amount as excise duty from buyers. The claim for refund of Rs. 21,329/- was supported by invoices showing duty paid on inputs of kits.

3. Claim for Interest on Refund Amounts:
TIDC filed an appeal (E/1159/2001) claiming interest for the delay in sanctioning the refund of Rs. 1,21,28,530/-. The Tribunal noted that the authorities took about a year to scrutinize and settle the claim, which should have been done within three months of filing. The delay was attributed to seeking information in installments. The Tribunal held that TIDC was eligible for interest under Section 11B of the Central Excise Act, 1944.

4. Delay in Sanctioning Refund and Eligibility for Interest:
The Tribunal found that the Revenue did not argue that TIDC withheld information, leading to the delay in settling the refund claim. The authorities were given three months to scrutinize and settle the claim, and TIDC was deemed eligible for interest for the delay in sanctioning the refund. The appeal was allowed, emphasizing the applicability of Section 11BB for granting interest on delayed refunds.

This detailed analysis highlights the issues of refund of central excise duty, rejection of specific refund claims, claim for interest on refund amounts, and the delay in sanctioning the refund with eligibility for interest as determined by the Appellate Tribunal CESTAT, Chennai in the cited judgment.

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