2024 (12) TMI 596 - AT - Central Excise

Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act 1944 - relevant time period - Calculation of the period for which interest on delayed refund is payable - HELD THAT - Undisputedly while remanding the matter back to the original authority in the present case of refund claim filed on 30.04.2010. While remanding the matter back to the original authority direction was given to decide the claim as per the directions contained in earlier order dated 07.10.2016 relied upon. In that order tribunal had specifically directed for grant of interest after three months from the date of filing of the refund claim therein i.e. 07.11.2007. In the present case instead of following the said direction new refund claim was got filed on 15.07.2021 after finalization of assessment and impugned order seeks to allow interest only for the period after three months from the that date. The impugned order has been passed contrary to the directions contained in the order dated 07.10.2016 and order dated 09.11.2018 and should be set aside for this reason itself. The entire proceedings in the present case emanate from the refund claim filed by the appellant on 30.04.2010 - Appellant shall be entitled for the refund for the period starting from 30.07.2010 as claimed by the appellant - appeal allowed.

Summary

Issues Involved:

1. Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act, 1944.
2. Calculation of the period for which interest on delayed refund is payable.
3. Compliance with tribunal directions regarding the refund process and interest entitlement.

Issue-wise Detailed Analysis:

1. Entitlement to Interest on Delayed Refund:

The central issue in this case revolves around the appellant's entitlement to interest on the delayed refund of excess duty paid. Under Section 11BB of the Central Excise Act, 1944, interest is payable if any duty ordered to be refunded is not returned within three months from the date of receipt of the refund application. The appellant initially filed a refund claim on 30.04.2010, which was subject to a series of appeals and remands. The adjudicating authority eventually sanctioned the refund amount but only partially allowed the interest claim, granting Rs. 12,176/- instead of the full amount claimed by the appellant.

2. Calculation of the Period for Interest Payment:

The appellant contested the calculation of interest, arguing that it should commence three months after the initial refund application date of 30.04.2010. The tribunal's decision, based on the Supreme Court's interpretation in the Ranbaxy Laboratories case, clarified that interest under Section 11BB becomes payable if the refund is not made within three months from the date of the refund application. The tribunal noted that the refund process was delayed due to the need for finalizing provisional assessments, which was completed on 08.07.2021. The adjudicating authority calculated interest from the revised refund application date of 15.07.2021, leading to a delay of only 13 days, thereby limiting the interest payable. However, the tribunal found this approach contrary to the legal mandate under Section 11BB and the Supreme Court's interpretation, which requires interest to be calculated from three months after the initial refund application.

3. Compliance with Tribunal Directions:

The tribunal highlighted a significant procedural issue where the original authority did not comply with the directions given in previous tribunal orders. Specifically, the tribunal had directed that the refund claim should be processed with interest calculated from three months after the initial application date. The tribunal's previous orders, dated 07.10.2016 and 19.11.2018, emphasized the need for adherence to these directions. The failure to follow these instructions led to the tribunal setting aside the impugned order, as it was contrary to the established legal framework and the tribunal's prior rulings.

In conclusion, the tribunal allowed the appeal, directing that the appellant is entitled to interest on the delayed refund from three months after the initial application date of 30.04.2010, in accordance with Section 11BB of the Central Excise Act and the Supreme Court's interpretation in the Ranbaxy Laboratories case. The decision underscores the importance of adhering to statutory mandates and judicial directions in refund and interest calculations.