2019 (6) TMI 503 - AT - Central Excise

Demand of interest on delayed payment of refunds - Area Based Exemption Scheme notified under Notification No. 33/99-CE dt. 08/07/1999 - HELD THAT - The Hon ble High Court in UNION OF INDIA AND 3 ORS. VERSUS AMALGAMATED PLANTATIONS P LTD. 2016 (8) TMI 124 - GAUHATI HIGH COURT had examined the claim of interest under Section 11 BB of the Act in respect of delayed payment of refund rising under the Area Based Exemption Notification No. 33/99 and held that the liability of the Revenue to pay interest under Section 11BB commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) and not on the expiry of the said period from the date on which the order of refund is made. Interest allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Claim for interest on delayed payment of refunds under Section 11BB of the Central Excise Act.
2. Interpretation of Notification No. 33/99-CE regarding area-based exemption.
3. Applicability of interest under Section 11BB to refunds claimed under specific notifications.

Analysis:
1. The case involved a dispute regarding the payment of interest on delayed refunds claimed by the Respondent under Section 11BB of the Central Excise Act. The Respondent, a unit availing benefits under Notification No. 33/99-CE, had filed refund claims for Excise Duty paid on LPG manufactured at their plant in Assam. The Commissioner (Appeals) allowed the interest on delayed payments, which was challenged by the Revenue. The Respondent relied on a similar case decided by the Guwahati High Court, where interest was held payable under Section 11BB for delayed refunds.

2. The Respondent's unit operated under the Area Based Exemption Scheme of Notification No. 33/99-CE, claiming refunds periodically. The dispute centered on the claim for interest on delayed refund payments made by the Respondent. The Original Authority had initially denied the interest, citing the nature of refunds under the said notification. However, the Commissioner (Appeals) disagreed and allowed the interest payment, leading to the present challenge by the Revenue.

3. The Tribunal examined the Guwahati High Court's decision in a similar case, where interest under Section 11BB was upheld for delayed refund payments covered by area-based exemption notifications. The High Court's ruling emphasized that once a manufacturer is entitled to duty exemption, refunds must be processed promptly, with interest payable for delays beyond three months. Citing relevant sections of the Central Excise Act, the High Court's decision was reaffirmed, leading the Tribunal to reject the Revenue's appeal and uphold the Commissioner (Appeals) decision to allow interest on delayed refund payments.

This detailed analysis of the judgment highlights the key issues of interest payment on delayed refunds, the interpretation of specific notifications, and the application of relevant legal provisions under the Central Excise Act, as examined and decided by the Appellate Tribunal CESTAT KOLKATA.