2022 (11) TMI 560 - AT - Central Excise

Interest for delay in sanction of refund of cenvat credit which was reversed in excess to the actual reversal - Rule 6(3) of CCR 2004 and Section 11 BB of CEA - HELD THAT - There is no dispute regarding sanction of refund as the appellant has been granted the refund of excess reversal of cenvat credit. The Learned Commissioner has denied the claim of interest on the ground that since the appellant were entitled to take the suo moto credit the refund is not governed by section 11 B. It is surprising to note that in one hand the department has undisputedly sanctioned the refund in cash obviously under section 11B then why the different treatment should be given for grant of interest which is consequential to refund under section 11 B. There is no dispute that there is a delay in sanctioning the refund against the application of refund filed by the appellant on 24.05.2016 and 21.07.2016 whereas the refund was granted on 05.11.2018. It is settled law that in case of delay in sanctioning refund after 3 months of filing of application the assessee is entitled for the interest after 3 months from the date of application till the sanction of refund - the appellants are entitled for the interest in the refund claim sanctioned from the date after 3 months of filing the application for refund claim till the date of sanction. Appeal allowed.

Summary

Issues:
Entitlement to interest for delay in sanction of refund of cenvat credit reversed in excess to the actual reversal required under Rule 6(3) of CCR, 2004.

Analysis:

1. The appellant reversed cenvat credit in excess and applied for a refund claim, which was sanctioned without interest. The Commissioner (Appeals) rejected the appeal stating the appellant could have adjusted the excess amount suo moto and thus not entitled to interest. The appellant contended that refund claims are governed by Section 11B, entitling them to interest under Section 11BB. Citing precedents, the appellant argued that excise duty includes cenvat credit, making the refund subject to Section 11B and interest under Section 11BB.

2. The Revenue argued that since the appellant could have taken suo moto credit but failed to do so, they are not entitled to interest. The Tribunal noted that the refund was granted under Section 11B and questioned the denial of interest. Considering the delay in sanctioning the refund, the Tribunal referred to the Supreme Court's decision in Ranbaxy Laboratories Ltd Vs. Union Of India, holding that interest is due if the refund is not sanctioned within 3 months of the application. Consequently, the Tribunal held that the appellant is entitled to interest from 3 months after the refund claim application until the date of sanction.

3. The Tribunal set aside the impugned orders and allowed the appeals, emphasizing the appellant's entitlement to interest for the delayed sanction of the refund claim. The judgment highlighted the discrepancy in treatment between refund sanction and interest entitlement, ultimately ruling in favor of the appellant based on legal principles and precedents.

This detailed analysis of the judgment outlines the legal arguments, precedents cited, and the Tribunal's reasoning leading to the decision to grant interest to the appellant for the delayed refund sanction.