2024 (8) TMI 472 - AT - Central Excise

Denial of interest on the alleged delayed sanction of refund - HELD THAT - On perusal of the SCNs dt. 31.03.2015 and 04.11.2015, it is not found that even though the appellant had filed a refund claim, the show cause notice proposed to reject the refund claim alleging that the appellant is not eligible for the benefit of exemption under Notification No.30/2004. After due process of law, the original authority considered the issue as to whether the appellant is eligible for the benefit of notification and held the issue against the appellant. The original authority held that the appellant is not eligible for benefit of exemption and the duty paid is in order. Consequently, the refund was rejected. Against this, the appellant filed appeal before the Commissioner (Appeals) who vide order dt. 23.08.2018 held that the appellant is eligible for the benefit of exemption of the notification and that they are not liable to pay the CVD. Consequently, the Commissioner (Appeals) remanded the matter to verify as to whether the claim of refund is hit by unjust enrichment. In such de novo order, the original authority held that after verification of details from the Range officer concerned, it is established that the duty element is not passed on to another. There are no ground to accept the argument of the appellant that they are eligible for interest on the refund by considering the date of filing the original refund claim. In regard to the periods for July 2016 to September 2016 as well as October 2016 to June 2017, the Ld. Consultant has brought to our notice that the refund claims were filed on 27.06.2017 and 16.10.2017 respectively. The Department has not issued any SCN at all for these periods. The appellant is eligible for interest on the delayed payment of refund from the date immediately after the expiry of 3 months from the date of Order-in-Appeal dt. 23.08.2018 in terms of Section 11BB of Central Excise Act, 1944. The appellant would be eligible for interest at the rate applicable as per the relevant notification issued under Section 11BB of Central Excise Act, 1944. Appeal allowed in part.

Summary

Issues Involved:
1. Eligibility for exemption of CVD under Notification No.30/2004-CE.
2. Denial of refund claims and the issue of unjust enrichment.
3. Entitlement to interest on delayed refund.

Detailed Analysis:

1. Eligibility for Exemption of CVD Under Notification No.30/2004-CE:
The appellant, engaged in manufacturing and selling readymade apparels, claimed exemption from CVD under Notification No.30/2004-CE, which exempts certain goods from excise duty provided no CENVAT credit is availed. The Department contested this, leading to the appellant paying the duty under protest. The original authority upheld the Department's view, rejecting the exemption and the subsequent refund claims. However, the Commissioner (Appeals) later ruled in favor of the appellant, confirming their eligibility for the exemption but remanded the matter to verify unjust enrichment.

2. Denial of Refund Claims and the Issue of Unjust Enrichment:
The appellant filed multiple refund claims for the duty paid under protest. The Department issued show cause notices (SCNs) challenging the eligibility for exemption but did not initially address unjust enrichment. The original authority rejected the refund claims, which the appellant appealed. The Commissioner (Appeals) allowed the exemption but remanded the case for unjust enrichment verification. The appellant contested this remand but eventually withdrew their appeal upon the Department's advice, leading to a fresh refund claim and subsequent SCN addressing unjust enrichment. The original authority eventually sanctioned the refund after verifying that the duty incidence was not passed on to customers, supported by a Chartered Accountant's certificate.

3. Entitlement to Interest on Delayed Refund:
The appellant argued for interest on the delayed refund from the original claim dates (2014, 2015, 2017). The Commissioner (Appeals) awarded interest starting from three months after the appeal withdrawal date (10.11.2021), amounting to Rs.49,51,509/-. The appellant contended that interest should be calculated from the original claim dates as per Section 11BB of the Central Excise Act, 1944. The Tribunal, referencing a prior decision in the appellant's case, ruled that interest should be granted from three months after the Order-in-Appeal date (23.08.2018), not from the original claim dates.

Conclusion:
The Tribunal upheld the appellant's eligibility for exemption under Notification No.30/2004-CE and confirmed the refund claims after verifying unjust enrichment. It ruled that interest on the delayed refund should be calculated from three months after the Order-in-Appeal date (23.08.2018) as per Section 11BB of the Central Excise Act, 1944, modifying the impugned orders accordingly. The appeals were partly allowed with consequential reliefs.