2007 (12) TMI 44 - AT - Central Excise

Held that interest on delayed refund is to be paid after the expiry of three months from the final disposal of the dispute between the parties and does not relate to refund of excess duty paid - appellants are entitled to interest at the appropriate rate - set aside the impugned order and allow the appeal

Summary

Issues:
Claim of interest on delayed sanction of refund.

Analysis:
The issue in this case revolves around the rejection of the appellants' claim for interest on delayed sanction of refund by the authorities below. The authorities contended that the relevant date for computing the period of three months, after which interest becomes payable, was 24-12-2004, and since the refund amount was sanctioned on 18-3-2005, which was prior to the expiry of three months from 24-12-2004, the claim for interest was rejected. However, the appellants argued that there was a delay in the sanction of the refund, as they had filed the claim for refund of excess duty paid on 6-5-1999, and the refund was sanctioned only in March 2005.

The contention of the Revenue was that the three-month period should be computed from 24-12-2004, the date on which the applicants applied for a refund after the Tribunal's decision. The Vice-President, referring to a decision of the Hon'ble Rajasthan High Court, held that the liability to pay interest on the refund amount is not contingent upon the adjudicative decision of duty payment in excess and refund sanction. The Rajasthan High Court case cited involved a situation where the refund was ultimately found to be payable after a considerable delay despite the Tribunal's decision in favor of the assessee. The court ruled that interest on the refund amount should be paid from the expiry of three months from the date of application for refund.

The Vice-President further relied on the Rajasthan High Court judgment and other Tribunal decisions to support the appellants' entitlement to interest at the appropriate rate after the expiry of three months from the initial application for refund in 1999. The decision highlighted the distinction between cases of delayed refund due to pre-deposit disputes and cases of excess duty paid, emphasizing that interest on delayed refund in the latter scenario should be paid after the expiry of three months from the date of the refund application. In conclusion, the impugned order was set aside, and the appeal was allowed, granting the appellants the right to interest on the delayed refund amount.

This comprehensive analysis of the judgment showcases the meticulous consideration of legal precedents and principles governing the entitlement to interest on delayed refund sanctions, ultimately resulting in a favorable outcome for the appellants based on established legal interpretations and precedents.