2006 (10) TMI 101 - AT - Central Excise

This is the second round of litigation relating to interest payable on the refund - refund application filed on 10-9-97 - order of the Comm. (A) sanctioning refund is dated 22-12-03 - earlier orders of the Asst. Comm. not sanctioning the refund claim don t exist so Comm. (A) order takes the place of order sanctioning refund & it is naturally with reference to the original application of the claimant interest from the expiry of 3 months from date of receipt of refund application is payable

Summary

Issues:
- Department's appeal against the order of the Commissioner (Appeals) modifying the original refund claim.
- Entitlement to interest on the refund amount.
- Interpretation of Section 11BB regarding payment of interest on delayed refunds.

Analysis:
1. The case involves a refund claim filed by the respondent, which was initially rejected by the Assistant Commissioner but later allowed by the Commissioner (Appeals). The issue in contention is the entitlement to interest on the refunded amount.

2. The Tribunal considered Section 11BB, which mandates payment of interest on refund claims paid after three months from the date of application receipt. The explanation under Section 11BB clarifies that orders from higher authorities like the Commissioner (Appeals) are deemed as orders under the said section for interest calculation purposes.

3. The Tribunal emphasized that interest should be calculated from three months after the refund application date until the actual payment date. In this case, the Commissioner (Appeals) order sanctioning the refund is considered as a replacement for the original refund application, warranting interest payment from the specified period.

4. It was clarified that the Commissioner (Appeals) decision did not involve new issues like dutiability or duty rates, which would necessitate a fresh application. The interest granted by the Commissioner (Appeals) from the specified period was deemed legal and in line with the original refund application.

5. The Tribunal dismissed the Department's appeal, upholding the Commissioner (Appeals) decision to grant interest on the refund amount from three months after the refund application date. The judgment provides clarity on the interpretation of Section 11BB and the calculation of interest on delayed refund claims.

6. The decision was pronounced in court on 5-10-2006, concluding the second round of litigation regarding interest payable on the refund, and establishing the legal basis for interest calculation on delayed refund claims under Section 11BB.