2004 (11) TMI 151 - AT - Central Excise

Summary

Issues:
Whether the respondents are legally entitled to claim interest on the refund of the pre-deposit amount.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi revolves around the question of whether the respondents have the legal right to claim interest on the refund of a pre-deposit amount. The Commissioner (Appeals) allowed the interest based on a previous order by another Commissioner (Appeals) and affirmed by the Tribunal. The respondents had made a pre-deposit of Rs. 4 lakhs in compliance with the Tribunal's stay order, challenging the duty and penalty imposed on them. The Tribunal later accepted the appeal and set aside the order under appeal. Subsequently, the respondents filed a refund claim seeking the return of the pre-deposited amount. The refund was granted within three months of the application for refund.

The learned Counsel argued that the respondents are entitled to interest on the pre-deposited amount from the date of the Tribunal's order. However, the Tribunal found this argument unsubstantiated. Section 11BB deals with interest on delayed refunds, allowing interest only if the amount is not refunded within three months of the refund application. In this case, the refund was issued within three months of the application, and no specific direction for immediate refund was given by the Tribunal. The Commissioner (Appeals) erred in allowing interest to the respondents based on an earlier order without considering the specific circumstances of this case.

As a result, the Tribunal set aside the order of the Commissioner (Appeals) granting interest to the respondents and allowed the appeal of the Revenue. The Cross Objections filed by the respondents seeking the rejection of the Revenue's appeal were also dismissed. The judgment clarifies the application of Section 11BB regarding interest on delayed refunds and emphasizes the need for a refund application within the specified timeline for claiming interest.