2018 (4) TMI 300 - AT - Service Tax

Interest on delayed refund (on already sanctioned amount) - section 11BB of CEA - Held that - the Hon ble Apex Court in the case of Ranbaxy Laboratories Ltd. vs. UOI 2011 (10) TMI 16 - Supreme Court of India has upheld grant of interest in case of late disbursal of refund from the expiry of three months of refund application till refund is granted and not from the date of order of refund - circular No 670/61/2002-CX dt. 01/10/2002 issued by CBEC also clarified that the provisions of Section 11BB of the Central Excise Act gets automatically attracted for any refund sanctioned beyond a period of three months - appellant are entitled to interest - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Appeal against order disallowing refund and interest on sanctioned amount.

Analysis:
The appeal was filed against an order passed by the Commissioner(Appeals) disallowing a refund claim partially and not granting interest on the sanctioned amount. The appellant, registered under various categories, sought refund of unutilized CENVAT credit on input services used for exported output services. The Assistant Commissioner partially rejected the claim, leading to the appeal. The appellant specifically requested interest on the sanctioned amount, which was not addressed in the impugned order. The counsel argued that interest should be granted as per various High Court and Supreme Court decisions equating CENVAT credit refund to duty refund under Section 11B of the Central Excise Act. The counsel cited relevant cases to support the claim for interest on the refund.

The counsel further argued that Section 11B covers both duty and CENVAT credit refunds, making Section 11BB applicable for interest on CENVAT credit refunds. Citing judgments like Ranbaxy Laboratories Ltd. vs. UOI and Sterlite Industries Ltd., it was emphasized that interest should be granted from three months after the refund application until the refund is granted. The counsel also referred to circulars clarifying the applicability of Section 11BB for refunds sanctioned beyond three months. Additionally, it was noted that the Department's appeal against a similar decision was dismissed by the Supreme Court, reinforcing the entitlement to interest on the sanctioned refund.

The Tribunal, in light of the settled legal position established by the Supreme Court, held that the impugned order was not sustainable in law. Consequently, the order disallowing the refund and interest was set aside, allowing the appeals of the appellant. The judgment was pronounced on 21/02/2018.