2014 (3) TMI 374 - AT - Central Excise

Interest for delayed payment of refund of duty - Refund u/s 11B - Held that - Section 11B does not make any distinction with regard to duty charged as per Section 3 of the act or Section 3A of the Act. Rule 96ZQ only provide the machinery provisions to decide whether duty liability was discharged correctly. In the case of levy under Section 3 refund can arise due to notifications issued under Section 5A of the Act and if excess payments arise refund has to be granted to subject to provisions of Section 11B - papers filed with Deputy Commissioner, Erode in pursuance of the sanction order dated 26-3-2009 issued by the Commissioner was the application as envisaged in Section 11B for refund of duty. All along the stand of the department has been that the Assistant/Deputy Commissioner, Erode was not the competent authority to sanction the rebate amount but the competent authority was the Commissioner. The applicants had filed the claim before the Commissioner on 29-3-2000 and 27-1-2000 itself and those applications have been sanctioned by the Commissioner, albeit with delay. So those applications are to be treated as applications for refund and not the papers sent to Deputy Commissioner of Central Excise, Erode for getting the money consequent to the sanction order issued by the Commissioner - appellant is eligible for interest as claimed, subject to verification of calculation of quantum of interest with regard to applicable rates but accepting the date of filing of claim as 29-3-2000 and 27-1-2000 - Decided in favour of assessee.

Summary

Issues:
Claim for interest for delayed payment of refund of duty claimed as abatement under Rule 96ZQ(7).

Analysis:
The appeal involved a claim for interest for delayed payment of refund of duty claimed by the appellant as abatement under Rule 96ZQ(7). The appellant had followed the procedure for claiming abatement of advance duty paid during periods of factory closure. After a long delay, the Commissioner sanctioned a partial amount, leading to the appellant claiming interest for the belated payment of the refund. The matter went through various stages of appeal, including before the Commissioner (Appeal) and the Tribunal. The key issue was determining the date of filing of the refund claim and whether the delay in payment warranted the claimed interest.

The adjudicating authority considered the date of filing the refund application and calculated interest accruing only after three months from that date. The authority held that interest would accrue from the date immediately after the expiry of three months from the filing of the claim. The interest amount was calculated based on the applicable rate and the delay period, resulting in a partial interest payment being sanctioned.

The Tribunal analyzed the provisions of Section 11B and Section 11BB of the Central Excise Act. It noted that the rebate claims filed by the appellant could be considered as applications for refund under Section 11B. The argument that the matter pertained to a refund of duty under Rule 96ZQ and not under Section 11B was dismissed, as Section 11B does not differentiate based on the duty charged under specific sections of the Act. The Tribunal also highlighted an inherent contradiction in considering the papers filed with the Deputy Commissioner as the refund application, emphasizing that the applications filed with the Commissioner should be treated as refund applications.

Ultimately, the Tribunal held that the appellant was eligible for the interest claimed, based on the date of filing the original claim with the Commissioner. The appeal was allowed, emphasizing the importance of verifying the calculation of the interest amount concerning applicable rates. The judgment was pronounced on 11-4-2013.