2023 (6) TMI 993 - AT - Central Excise

Interest on refund claim - relevant date for calculating the interest arising due to a delay in the payment - appellant claimed credit from the date on which they reversed the CENVAT Credit - HELD THAT - The issue regarding the relevant date for payment of interest was examined by the Hon ble Supreme Courts in its judgment in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT . The Hon ble Court cited Boards instructions which covered consequential refunds and stated that the provisions of section 11BB of the Act, are attracted automatically for any refund sanctioned beyond a period of three months and that the jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest. The liability of the Proper Officer to pay interest commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act, as stated under Section 11BB of the Act and not from the date of reversal of credit under protest as sought by the appellant or the date of filing the revised claim as per the impugned order. The rate of interest payable would also be governed by the relevant interest rate notification issued under the Act and was prevalent at that time. This is not a case where the refund was delayed by the appellant for want of critical documents that would be necessary to quantify the refund. It was mainly because the department wanted the appellant to pay the interest amount due first, which could very well have been adjusted by the department from their refund claim as consented by the appellant - thus, as per the statutory mandate of Section 11BB of the Act the department is under a 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 and not from the revised date of filing the claim as decided in the impugned order. The relevant date for calculating interest commences from the date of expiry of three months from the date of receipt of application for refund by the department i.e. from 05/10/2018 in terms of Section 11BB of the Central Excise Act, 1944 - Appeal disposed off.

Summary

Issues Involved:
1. Eligibility for interest on the refund claim.
2. Relevant date for calculating interest on the refund.

Summary:

Issue 1: Eligibility for Interest on the Refund Claim

The appellants filed a refund claim of Rs. 3,00,97,192/- on 05/10/2018 following a Tribunal order allowing their appeal related to electricity wheeled to sister units. They requested the department to adjust the amount payable against the refund due. The department returned the claim on 28/01/2019, demanding interest on the reversed credit. The appellant paid the interest on 15/05/2019 and resubmitted the claim. The adjudicating authority sanctioned Rs. 2,09,80,128/- but rejected Rs. 1,74,88,805/- claimed towards interest. The Commissioner (Appeals) held that interest was applicable only after three months from 21/05/2019, the date of the revised claim. The appellant contested this decision, asserting that interest should be calculated from the original date of duty deposit.

Issue 2: Relevant Date for Calculating Interest on the Refund

The Tribunal considered the relevant date for calculating interest due to delay in refund payment. The appellant argued that interest should be calculated from 15/04/2005, the date of CENVAT credit reversal. The Tribunal referred to Section 11BB of the Central Excise Act, 1944, which mandates interest if the refund is not made within three months from the date of application. The Tribunal cited the Supreme Court's judgment in Ranbaxy Laboratories Ltd. Vs UOI, which clarified that interest is payable from three months after the receipt of the refund application. The Tribunal concluded that the relevant date for interest calculation is three months from 05/10/2018, the date of the original refund application, and not from the revised claim date or the date of credit reversal.

Conclusion

The Tribunal set aside the impugned order, ruling that the relevant date for calculating interest is three months from the date of the original refund application (05/10/2018) as per Section 11BB of the Central Excise Act, 1944. The appeal was disposed of accordingly.