2013 (2) TMI 436 - AT - Service Tax

Non-payment of interest on the amount of refunds belatedly sanctioned to them - Held that - There being no dispute regarding belated sanction of refund to the appellant, the appellant is eligible for the interest on such belatedly sanctioned refunds. The amount of interest needs to be calculated by the lower authorities, period after three months of filing of the refund claim by the appellant with the authorities, till the amount is refunded to them. See NIRMA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD 2011 (3) TMI 1257 - CESTAT, AHMEDABAD Notification No. 41/07. dated 6-10-2007 itself provides clearly that the relevant date for determination of limitation is the date on which proper officer of Customs makes an order permitting clearance and loading of the goods for exportation. Therefore the finding that the claim is time-barred because it is filed beyond the period when counted from the date of ARE-1 is appears to be against the provisions of Notification No. 41/07-S.T., dated 6-10-2007. Provisions of Section 83 of Finance Act, 1994 clearly provide that provisions of Section 11BB are made applicable to service tax matters, there is no reason as to why this aspect has not been verified before rejecting the refund claim by both the lower authorities - the impugned orders are required to be set aside and the matter is remanded to the original adjudicating authority to verify the facts, correctly record them and also apply the statute correctly to the facts of the case - in favour of assessee as directed.

Summary

Issues:
- Refund of service tax paid on exported goods
- Claim for interest on delayed refunds

Analysis:
Issue 1: Refund of service tax paid on exported goods
The appellant, engaged in the manufacture and export of de-oiled cakes, filed refund applications under Notification No. 41/2007-ST claiming service tax paid on exported goods. The adjudicating authority partially sanctioned the refund claims, leading to a higher judicial challenge by the appellant. The first appellate authority upheld the refund, which was initially rejected. The Tribunal also confirmed the refund order. The appellant subsequently claimed interest on the amounts not refunded within the stipulated time. The adjudicating authority and the first appellate authority rejected the interest claims. The appellant contended that interest was due as per the notification after three months of filing the refund claim. The appellant cited relevant case laws and statutory provisions to support their claim for interest on delayed refunds.

Issue 2: Claim for interest on delayed refunds
The Revenue argued that the provisions of Section 11BB of the Central Excise Act were not applicable in this case, and the notification did not provide for interest on refunds. The Tribunal found that the appellant was eligible for the refund, and the question of interest arose only concerning belatedly sanctioned refunds. The Tribunal referred to a previous case involving similar issues and directed the original adjudicating authority to reexamine the matter expeditiously. The Tribunal emphasized the correct application of statutory provisions and factual verification. The Tribunal ruled in favor of the appellant, allowing the appeals and granting interest on belatedly sanctioned refunds. The Revenue had appealed the decision to the High Court, which was pending at the time of the Tribunal's judgment.

In conclusion, the Tribunal held that the appellant was entitled to interest on the belatedly sanctioned refunds, directing the lower authorities to calculate the interest amount from three months after the refund claim filing until the actual refund payment. The judgment highlighted the importance of correctly applying statutory provisions and verifying facts in refund cases related to exported goods.