2005 (7) TMI 107 - HC - Central Excise

Interest on delayed refund - Sharbat Rooh Afza - Beverages - non-sweetened alcoholic beverage - HELD THAT - Admittedly in the present case it is not in dispute that the claim for refund was made on 25th August 1999 whereas the order for refund has been passed on 16th November 2000. Under the provision of Section 11BB of the Act interest start running after three months from the date of the application irrespective of the fact as to whether the order for refund has been made subsequent to the period of three months. As in the present case the order for refund has been made on 16th November 2000 i.e. much after the expiry of period of three months from the date of making the application therefore the respondents are liable to pay interest at the specified rate therein. Liability for payment of interest is statutory and therefore it was the bounden duty of the Assistant Commissioner of Central Excise Division-I Ghaziabad to also pay interest from 26th November 1999 to 16th November 2000 at the rate specified u/s 11BB of the Act. Thus the writ petition succeeds and is allowed. The Assistant Commissioner of Central Excise Division-I Ghaziabad is directed to pay interest at the specified rate on the sum of Rs. 3, 74, 00, 000/- from 26th November 1999 to 15th November 2000 within a period of thirty days from the date a certified copy of this order is filed before the said officer. As the respondents have failed to discharge the statutory duty the petitioner has also become entitled for costs which we assess at Rs. 10, 000/- payable by the respondents.

Summary

Issues:
Claim for interest on delayed refund under Section 11BB of the Central Excise Act, 1944.

Analysis:
The petitioner, a Wakf engaged in the business of manufacturing and selling various items, including Rooh Afza, sought a refund of Rs. 3,74,00,000 paid under protest due to a dispute over the classification of Rooh Afza under the Central Excise Tariff Act. The Apex Court had initially classified Rooh Afza under Heading 2201.90 but later corrected it to 2202.90. The petitioner applied for a refund after the correction, and the Assistant Commissioner of Central Excise sanctioned the refund but did not pay the interest on the delayed refund as per Section 11BB of the Act.

The petitioner contended that interest is payable if the duty is not refunded within three months of the refund application. The respondents argued that the refund was delayed due to queries raised by the adjudicating authority. However, the court found the petitioner's claim justified under Section 11BB, which mandates payment of interest if the refund is delayed beyond three months from the application date.

Section 11BB imposes a statutory duty on the adjudicating authority to decide the refund claim promptly within three months. In this case, the refund application was made on 25th August 1999, but the refund order was issued on 16th November 2000, well beyond the three-month period. Consequently, the respondents were held liable to pay interest from 26th November 1999 to 15th November 2000 at the specified rate under Section 11BB.

The court allowed the writ petition, directing the Assistant Commissioner to pay interest on the refund amount within thirty days of the order. Additionally, the respondents were ordered to pay costs of Rs. 10,000 to the petitioner for failing to fulfill their statutory duty.