2018 (12) TMI 98 - HC - Central Excise

Interest on delayed refund - Section 11BB of the Central Excise Act - Held that - Admittedly, the respondents/revenue have refunded a sum of ₹ 59,374/- only on 07.09.2009, despite the order passed by the Commissioner (Appeals) not to chosen to pay the interest, this Court has also observed that the definition of debt under the Interest Act, covered the present event also - this Court is of the considered view that, the writ petitioner/appellant is entitled to interest on the belated refund. The writ petitioner/appellant is entitled to interest @ 6% per annum under the Interest Act, for the period from 06.08.1985 to 26.08.1995 and under Section 11BB of the Central Excise Act from 26.08.1995 to 07.09.2009 - Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Issuance of writ of certiorarified mandamus.
2. Refund of ?60,108.72/- with interest.
3. Maintainability of the writ petition.
4. Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act and the Interest Act.
5. Application of precedents from the Supreme Court.

Issue-wise Detailed Analysis:

1. Issuance of writ of certiorarified mandamus:
The writ petitioner/appellant sought a writ of certiorarified mandamus to quash the order dated 23.01.2007 in Appeal Nos.14 & 15/2007 and to direct the respondents to refund ?60,108.72/- with interest. The High Court noted that the writ petition was entertained, and during its pendency, the respondents paid a principal sum of ?59,374/- to the appellant.

2. Refund of ?60,108.72/- with interest:
The appellant had previously filed W.P.No.13775 of 1988, which was allowed, directing the respondents to calculate and refund the correct amount. The respondents' appeal against this order in W.A.No.647 of 1999 was dismissed, and the judgment reached finality. Despite this, the respondents delayed the refund, paying only during the pendency of W.P.No.1359 of 2008 on 07.09.2009.

3. Maintainability of the writ petition:
The learned Single Judge found the writ petition not maintainable as the appellant had disclosed the challenge before the CESTAT and did not challenge the order denying interest on the belated payment. The appellant's plea for interim stay was also found unsustainable based on precedents from the Supreme Court in Union of India v. Shreeji Colour Chem Industries and Union of India vs. E.Merck (India).

4. Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act and the Interest Act:
The appellant argued that they were entitled to interest for the period from 06.08.1985 to 26.08.1995 under the Interest Act and from 26.08.1995 to 07.09.2009 under Section 11BB of the Central Excise Act. The respondents contended that the interest on refund could not be termed as 'debt' under Section 2(c) of the Interest Act. The High Court disagreed, citing precedents that interest is not a penalty but a nominal accretion of facts, and a written demand for interest was made by the appellant.

5. Application of precedents from the Supreme Court:
The High Court referred to judgments in Commr. Of C.Ex., Mumbai v. BOC (I) Ltd., and Union of India v. Shreeji Colour Chem Industries, which held that interest is not a penalty but a nominal accretion. The Court also referred to Clariant International Ltd. v. Securities and Exchange Board of India, which stated that interest could be awarded on equitable considerations if money due was wrongfully withheld. The Court found that the appellant's claim for interest was justified as the respondents had delayed the refund despite a final order.

Conclusion:
The High Court allowed the writ appeal, setting aside the impugned order dated 22.03.2013 in W.P.No.1359 of 2008. The appellant was entitled to interest at 6% per annum under the Interest Act for the period from 06.08.1985 to 26.08.1995 and under Section 11BB of the Central Excise Act from 26.08.1995 to 07.09.2009. The respondents were directed to pay the interest within eight weeks from the date of receipt of the judgment. No order as to costs was made considering the case's facts and circumstances.

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