2014 (8) TMI 367 - HC - Central Excise

Interest u/s 11B on delayed refund - refund was allowed after a long litigation process - Held that - it is apparently clear that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act provides that in case any duty paid is found to be refundable and if duty is not refunded within a period of three months from the date of receipt of the application submitted under sub-section (1) of Section 11B then interest would be payable at such rate as may be fixed by the Central Government on the expiry of the period of three months from the date of the receipt of the application. The explanation after the proviso to Section 11BB introduces a deeming fiction, namely, that where an order for refund of duty is not made by Assistant Commissioner of Central Excise but by the appellate authority or by the Court then for the purpose of this section the order made by such higher appellate authority or by the Court shall be deemed to be an order passed under sub-section (2) of Section 11B of the Act. Interest becomes payable on the expiry of the period of three months from the date of the receipt of the application for refund under sub-section (1) of Section 11B of the Act - Following decision of Ranbaxy Laboratories Ltd. Vs. Union of India 2011 (10) TMI 16 - Supreme Court of India - Decided against Revenue.

Summary

Issues:
1. Refund of duty for defective colour picture tubes under Rule 173-L of Central Excise Rules, 1944.
2. Reduction of refund amount due to delayed filing.
3. Payment of interest under Section 11BB of Central Excise Act, 1944.

Refund of Duty for Defective Colour Picture Tubes:
The case involved the refund claim for defective colour picture tubes reprocessed by the manufacturers under Rule 173-L of the Central Excise Rules, 1944. The respondents filed a declaration in Form-D3 after reprocessing the tubes and claimed a refund of duty paid. The adjudicating authority initially rejected the claim, but the Commissioner, Appeal, Central Excise allowed the appeal, granting the refund. However, the adjudicating authority reduced the refund amount due to a delay in filing the claim, which led to subsequent appeals and the matter reaching the Custom Excise and Service Tax Appellate Tribunal.

Reduction of Refund Amount Due to Delayed Filing:
The adjudicating authority reduced the refund amount by &8377; 27,003/- citing that the claim was filed after the stipulated period of one year as per Rule 173-L(1) of the Central Excise Rules, 1944. The respondent argued that the appellate order had already determined their entitlement to the refund, and it was not within the adjudicating authority's purview to reassess the amount. The High Court agreed, stating that the duty refund issue had been settled in the first round of litigation, and the authority could not deviate from the appellate order.

Payment of Interest under Section 11BB:
The appellant contended that interest on the refund amount was only payable post the appellate order, not from the date of filing the refund application. The High Court analyzed Section 11BB of the Central Excise Act, which mandates interest payment if the duty refund is not processed within three months of the application. The court referred to a Supreme Court ruling in Ranbaxy Laboratories Ltd. Vs. Union of India, emphasizing that interest becomes payable three months from the date of the refund application. Ultimately, the court ruled in favor of the respondent, dismissing the appeal and upholding the interest payment under Section 11BB in this case.