2013 (11) TMI 589 - HC - Central Excise

Entitlement of Interest u/s 11BB of the Central Excise Act 1944 Delayed Refund Duty area based exemption - North Eastern Region - Held that - Once it is held that a manufacturer is entitled to exemption of excise duty in terms of the notification dated 8-7-1999, the excise duty paid shall be refunded to the manufacturer as per the schedule mentioned in the notification - Even in case of likely delay, refund has to be made on provisional basis - there cannot be any manner of doubt that the admissible excise duty refund cannot be withheld by the central excise authority - From a conjoint reading of Sections 11B and 11BB of the Central Excise Act, 1944, it is apparent that if any refund of excise duty is ordered under Section 11B(2), the same has to be refunded within three months from the date of receipt of application under sub-section (1) of that section, failing which interest will have to be paid. Language of Section 11B is very clear and unambiguous. Liability of the Revenue to pay interest under Section 11BB commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) and not on the expiry of the said period from the date on which the order of refund is made Relying upon Hindustan Coca-Cola Beverages Pvt. Ltd. v. Union of India 2004 (1) TMI 92 - HIGH COURT OF GAUHATI - while directing refund of excise duty paid in terms of notification dated 8-7-1999, had also directed payment of interest for delayed payment as per provision of Section 11 of the Central Excise Act, 1944 - Section 11B of the Central Excise Act, 1944 does not exclude claim of refund made in terms of the notification dated 8-7-1999 - Petitioners would thus be entitled to interest under Section 11BB of the Central Excise Act, 1944 on the excise duty refunded to them - The jurisdictional excise officers shall now determine the interest amount payable to the petitioners for the relevant periods Decided in favour of Petitioner.

Summary

Issues:
Entitlement to interest under Section 11BB of the Central Excise Act, 1944 on delayed excise duty refund.

W.P. (C) No. 1166/2012:
The petitioner, a company engaged in tea cultivation and manufacture, claimed a refund of excise duty under a 1999 notification granting exemptions. Despite various orders in favor of the petitioner, a balance amount remained unpaid. The court held that the excise duty refund, once deemed admissible, cannot be withheld by the central excise authority. Refund claims must be processed promptly. The court emphasized the applicability of Section 11B and 11BB of the Central Excise Act, 1944, stating that any refund ordered must be paid within three months, failing which interest is payable. Referring to past judgments, the court concluded that the petitioners were entitled to interest on the delayed refund. The jurisdictional excise officers were directed to determine and pay the interest amount within three months.

W.P. (C) No. 2325/2012:
In this case, a partnership firm engaged in tea manufacturing sought a refund of excise duty under the same 1999 notification. The excise authority initially sanctioned the refund but later refused to pay interest on the delayed refund, citing inapplicability of Section 11B. The court reiterated the provisions of Section 11B and 11BB, emphasizing that any duty refund, regardless of the nature, must be paid within three months, failing which interest is payable. The court referred to a previous judgment directing payment of interest for delayed refunds under the same notification. Consequently, the court held that the petitioners were entitled to interest on the delayed refund, instructing the excise officers to calculate and pay the interest amount within three months.

In both cases, the court emphasized the strict interpretation of fiscal legislation and the mandatory payment of interest on delayed refunds under Section 11BB. The judgments highlighted the importance of timely processing of refund claims and the obligation to pay interest if refunds are delayed beyond the stipulated period.