2014 (7) TMI 24 - AT - Central Excise

Claim of interest on belated refund - Held that - Department has taken a view that appellant is eligible for refund from three months from the date of receipt of the order of the Tribunal which attained finality as regards exemption as well as eligibility for refund. In such cases, it is settled law that the interest is payable from the date of filing the refund claim and not from the date of receipt of the final order of the Tribunal. In this case, the subject matter of the dispute itself was interest on the refund claim by the appellant after three months from the date of filing the refund claim. In such a situation, the stand taken by the Commissioner (Appeals) that three months has to be accounted from the date of receipt of the final order of the Tribunal taking a view that interest is admissible is not correct. I find that in the case of Ranbaxy Laboratories Ltd. v. UOI & Ors. 2011 (10) TMI 16 - Supreme Court of India , it has been held that liability of Revenue to pay interest under Section 11BB from the date of receipt of application for refund under Section 11B(1) of the Act. In this case, the refund claim was filed on 29-5-2007 before the original authority and therefore, the interest has to be paid calculating 3 months from that date - Decided in favour of assessee.

Issues:
1. Eligibility for refund under the Cenvat Scheme.
2. Calculation of interest on the refund amount.
3. Interpretation of the law regarding the payment of interest on refund claims.

Analysis:

Issue 1: Eligibility for refund under the Cenvat Scheme
The case involved the appellants filing a refund application after opting out from the Cenvat Scheme to avail full exemption of duty on their products. The appellants paid an amount towards Cenvat credit and claimed a refund, which was initially rejected by the adjudicating authority. The Commissioner (Appeals) allowed the appeal with consequential relief, but the Committee of Commissioners filed an appeal with the Tribunal. The Tribunal rejected the Department's appeal, leading to the appellant filing for refund, which was sanctioned by the Assistant Commissioner under Section 11BB of the Central Excise Act, 1944. The appellant then filed an appeal before the Commissioner (Appeals) for interest on the refund amount.

Issue 2: Calculation of interest on the refund amount
The Commissioner (Appeals) determined that the appellant was eligible for a refund after accounting for 3 months from the date of the Tribunal's order. However, the Department argued that interest should be payable from the date of filing the refund claim, not from the date of the Tribunal's order. The Tribunal referred to the case of Ranbaxy Laboratories Ltd. v. UOI & Ors., where it was held that the Revenue is liable to pay interest from the date of the refund claim application. As the refund claim was filed before the original authority on 29-5-2007, the interest had to be calculated from that date. The Tribunal allowed the appeal based on this interpretation.

Issue 3: Interpretation of the law regarding the payment of interest on refund claims
The Tribunal clarified that in cases where the dispute involves interest on a refund claim, the interest is payable from the date of filing the refund claim, not from the date of the final order. The Tribunal's decision was based on the settled law that interest under Section 11BB is payable from the date of the refund claim application. The Tribunal's ruling was in line with the interpretation provided in the Ranbaxy Laboratories Ltd. case, emphasizing the importance of calculating interest from the date of the refund claim submission.

In conclusion, the Tribunal allowed the appeal, emphasizing that interest on the refund amount should be calculated from the date of the refund claim application, as per the provisions of Section 11BB of the Central Excise Act, 1944.

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