2022 (6) TMI 538 - AT - Central Excise

Entitlement of interest on refund amount - relevant time for calculation of interest - calculation of interest after the expiry of 3 months from the date of filing of the refund claim or not - Section 11BB of Central Excise Act, 1944 - HELD THAT - As per the facts of the present case, it is found that there is no dispute about the fact that the refund claim had been filed on 19.05.2005 and the same was sanctioned only vide order-in-original both dated 04.04.2016. It is also noticed in the present matter that both the adjudicating authority considered the letter dated 23.11.2015 as refund claim application, whereas vide letter dated 23.11.2015 appellant only informed the Jurisdictional Deputy Commissioner that CESTAT has passed order in their favour and accordingly to sanction the refund amount along with interest. As per the statutory mandate of Section 11BB of the Act the department is under legal obligation to sanction the refund claim along with interest after the expiry of 3 months from the date of filing of the refund claim. In the present matter the time limit for payment of the refund amount to the Appellant by the Central Excise authorities (without interest) expired on 19-08-2005. Since, claimed amount was finally paid to the Appellant on 04.04.2016, the Appellant is entitled for the statutory interest from 20-8-2005 to the date when the refund was eventually paid, i.e., 04-4-2016. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of interest on refund amount claims.

Analysis:
1. The case involved appeals against the rejection of claims for interest on refund amounts by the Pr. Commissioner (Audit/Appeals) GST & Central Excise, Surat. The appellant had wrongly availed an exemption notification, leading to a duty payment requirement. After depositing the duty amount and filing refund claims for unutilized amounts, the claims were initially rejected but later sanctioned without interest, subject to a court decision. The appellant contested the denial of interest on delayed refunds.

2. The appellant's counsel argued that as per Section 11BB of the Central Excise Act, 1944, the department is obligated to pay interest on delayed refunds. Citing various judgments and CBEC circulars, it was emphasized that interest should be paid if refunds are not processed within three months of filing. The appellant contended that the provision regarding the relevant date should not apply in cases where refunds were delayed after being initially filed and disputed.

3. The Revenue representative reiterated the findings of the impugned order, leading to a key issue: determining the date from which interest on the sanctioned refund should be calculated. Section 11BB stipulates that interest is payable if refunds are not granted within three months of the application. In this case, the refund was sanctioned long after the three-month period, entitling the appellant to interest from the date after the three months expired until the actual refund date.

4. The Tribunal, after considering both parties' submissions and the statutory provisions, ruled in favor of the appellant. Citing the Supreme Court's judgment in a similar case, it established that interest under Section 11BB becomes payable after three months from the refund application date if the amount is not refunded. The impugned order was set aside, and the appeals by the appellant were allowed, granting consequential relief and statutory interest on the delayed refund amount from the due date to the actual payment date.

This detailed analysis of the judgment highlights the legal arguments, statutory provisions, and judicial precedents that influenced the Tribunal's decision in favor of the appellant regarding interest on delayed refund claims.