2014 (3) TMI 158 - AT - Central Excise

Interest on delayed refund - Whether the appellant are entitled for claiming interest on delayed refund of the amount paid by them before issuance of the show-cause notice or not - Held that - interest on delayed refund is payable on expiry of period of 3 months from the date of receipt of the application under Section 11B(1) of the Central Excise Act, 1944. Therefore, I direct the adjudicating authority to pay the interest to the appellant on delayed refund on expiry of period of three months from the date of receipt of application under Section 11B(1) - Following decision of the decision of Ranbaxy Laboratories Ltd. 2011 (10) TMI 16 - Supreme Court of India - Decided in favour of assessee.

Summary

Issues involved: Claim for interest on delayed refund of amount paid before show-cause notice issuance.

Analysis:
The central issue in this case revolves around the entitlement of the appellant to claim interest on a delayed refund of the amount they paid before the issuance of a show-cause notice. The appellant had made deposits prior to the notice, following a stay order by the Tribunal. Two refund claims were filed by the appellant, one related to a valuation case and the other to clandestine manufacture and clearance. The Tribunal remanded the valuation case for denovo adjudication, leading to a refund claim being filed and sanctioned. Similarly, in the clandestine manufacture case, the appellant paid directed amounts and filed a claim that was also sanctioned. The appellant sought interest on the delayed refunds.

The judgment refers to the decision in Ranbaxy Laboratories Ltd. case, where it was clarified that Section 11BB of the Act applies after a refund order under Section 11B has been made. Section 11BB stipulates that if duty paid is found refundable and not refunded within three months from the application receipt under Section 11B(1), interest becomes payable. The explanation under Section 11BB clarifies that orders by higher authorities are deemed as orders under Section 11B(2) for interest calculation. The court emphasized that interest becomes payable three months from the application receipt date.

Based on the precedent and legal provisions, the judgment directs the adjudicating authority to pay interest to the appellant on delayed refunds after three months from the application receipt under Section 11B(1) of the Central Excise Act, 1944. The authority is instructed to comply with this directive within 30 days of receiving the order. Consequently, the appeal is disposed of, settling the matter in favor of the appellant regarding the entitlement to interest on delayed refunds.