2022 (11) TMI 2 - AT - Service Tax

Relevant date for calculation of Interest - delayed grant of refund - case of appellant is that interest should have been granted after the expiry of three months from the date of filing of the refund applications - section 11BB of the Excise Act. Whether interest should be paid to the appellant after the expiry of three months from the date of filing of the four refund claims on 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017 or it should be paid after the expiry of three months from 29.01.2020 on which date the appellant had merely made a request to the Department to grant refund pursuant to the order passed by the Tribunal on 09.01.2020? HELD THAT - The applications were actually filed by the appellant for refund of the amount on 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017. Section 11BB of the Excise Act provides that if any duty ordered to be refunded under section 11B(2) is not refunded within three months from the date of receipt of application under sub- section (1), there shall be paid to the applicant interest from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty. The relevant date, therefore, is the date on which the application for refund is filed. The decisions in COMMISSIONER OF C. EX., PUNE-III VERSUS BALLARPUR INDUSTRIES LTD. 2008 (7) TMI 94 - HIGH COURT BOMBAY . M/S DABUR INDIA LIMITED VERSUS UNION OF INDIA AND 2 OTHERS 2016 (9) TMI 787 - ALLAHABAD HIGH COURT and RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT emphasise that though the order granting refund may have been passed on a subsequent date but interest has to be paid after the expiry of three months from the date of filing of applications for refund. The Commissioner (Appeals) committed an illegality in construing 29.01.2020 as the date of filing of the refund application whereas the dates of filing of the refund applications were 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017. On 29.01.2020 the appellant had merely submitted an application for implementation of the order passed for refund of the amount claimed in the four applications - The order passed by the Commissioner (Appeals) is, therefore, modified to the extent that interest shall be payable to the appellant after the expiry of three months from the actual date of filing the refund applications i.e. 30.03.2017, 20.06.2017, 31.07.2017 and 28.08.2017 till the date the refund was made i.e. 28.09.2021. Appeal allowed.

Summary

Issues Involved:
1. Determination of the relevant date for calculating interest on delayed refunds under Section 11BB of the Central Excise Act, 1944.
2. Legality of the Commissioner (Appeals)'s decision to grant interest from a specific date.

Issue-wise Detailed Analysis:

1. Determination of the relevant date for calculating interest on delayed refunds under Section 11BB of the Central Excise Act, 1944:

The appellant argued that interest should be calculated from the date of filing the original refund applications, which were on 30.03.2017, 20.06.2017, 31.07.2017, and 28.08.2017. The Commissioner (Appeals) had granted interest from 29.01.2020, the date when the appellant requested the refund based on the Tribunal's order dated 09.01.2020.

Section 11BB of the Excise Act specifies that interest on delayed refunds is payable if the refund is not made within three months from the date of receipt of the application. The relevant date for calculating interest is the date of filing the refund application, not the date of subsequent requests or orders.

2. Legality of the Commissioner (Appeals)'s decision to grant interest from a specific date:

The Commissioner (Appeals) had construed 29.01.2020 as the date of filing the refund application and granted interest from three months after this date. However, the Tribunal found this interpretation incorrect. The Tribunal emphasized that the relevant date for calculating interest should be the original dates of the refund applications: 30.03.2017, 20.06.2017, 31.07.2017, and 28.08.2017.

The Tribunal cited several judgments, including the Supreme Court's decision in Ranbaxy Laboratories Ltd. v/s Union of India and Others, the Allahabad High Court's decision in Dabur India Ltd. v/s Union of India, and the Bombay High Court's decision in Commissioner of Central Excise, Pune-III v/s Ballarpur Industries Ltd., which all support the view that interest is payable from three months after the date of the original refund application.

Conclusion:

The Tribunal concluded that the Commissioner (Appeals) committed an illegality by considering 29.01.2020 as the relevant date for calculating interest. The correct dates for calculating interest should be three months after the original refund application dates: 30.03.2017, 20.06.2017, 31.07.2017, and 28.08.2017. The order was modified accordingly, and the appeal was allowed to the extent indicated.