2010 (2) TMI 445 - AT - Central Excise

Interest on delayed refund - Relevant date - the appellants are manufactures of lead acid batteries falling under Chapter heading 85 of CETA, 1985. Amount paid during March, 2003 to June, 2004 on directions of revenue claimed as refund by assessee only on 12.07.2005. As per Commissioner (Appeals) order, interest payable for period beyond three months from date of filing of refund claim. Assessee contended that interest ought to have been granted from date of payment of amount by assessee. Held that - as per section 11BB of Act, authority allowed to process such claim and sanction same within three months failing which liable to pay interest. Refund claim sanctioned on 1.4.2006. No reason to interfere with Commissioner (Appeals) order.

Issues:
Refund claim for excess payment of interest, eligibility for interest under Section 11BB of the Central Excise Act, 1944, calculation of interest period for refund, applicability of interest on delayed payment of refund.

Analysis:
1. Refund Claim for Excess Payment of Interest:
The appeal involved a case where the appellant, a manufacturer of lead acid batteries, paid an amount of Rs. 33,54,576/- at the instance of the department against Rs. 19,71,255/- as actual interest payable on defaulted duty. The appellant filed a refund claim for Rs. 13,83,321/- for excess payment of interest, which was initially rejected by the Department. The Commissioner (Appeals) set aside the rejection and directed the lower authorities to re-determine the interest amount as per the method indicated in the order.

2. Eligibility for Interest under Section 11BB:
The Commissioner (Appeals) concluded that the appellant was eligible for interest in accordance with the provisions of Section 11BB of the Central Excise Act, 1944. This section mandates payment of interest if the refund claim is not processed and sanctioned within three months of filing. The Assistant Commissioner sanctioned the refund claim on 1-4-2006 after it was filed on 12-7-2005, leading to the determination of interest payable beyond the three-month period.

3. Calculation of Interest Period for Refund:
The appellant contended that interest should be granted from the dates they paid the amount (March, 2003 to June, 2004) as per revenue authorities' directions, not from three months after the refund claim filing date. The Commissioner (Appeals) granted relief for interest only after three months from the refund claim filing date, which the appellant challenged citing various legal precedents.

4. Applicability of Interest on Delayed Payment of Refund:
The appellant argued against the payment of interest on interest, stating that they paid the amount as per Rule 3 of the Central Excise Rules, 2002, which did not warrant additional interest. The contention was based on the premise that they paid an amount to the government that was not due, hence interest on interest should not apply.

5. Judgment:
The Tribunal upheld the Commissioner (Appeals)'s decision in favor of the appellant, stating that interest was payable by the lower authorities for the period exceeding three months from the refund claim filing date. The Tribunal found no reason to interfere with the order, considering the factual matrix of the case and the correct application of Section 11BB. The appeal by the appellant was rejected, affirming the decision of the Commissioner (Appeals).

This detailed analysis of the judgment highlights the key issues addressed in the case, the legal provisions applied, and the reasoning behind the decision rendered by the Tribunal.

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