2014 (9) TMI 847 - AT - Central Excise

Interest on refund - Whether interest on the refund of unutilized credit for the period of delay is payable in terms of the provisions of Section 11BB - Held that - Though the judgment is silent about the rate of interest, the learned Counsel for the appellant states that the interest had earlier been paid @ 6% and in terms of the notification issued under Section 11BB also, the rate of interest is the same. As regards the date of filing of refund claim and the date from which the interest liability will start, the order dated 09/02/09 of the Tribunal mentions the dates of filing of these refund claims as 04/02/03 and 11/02/03. However, the learned DR pleads that as has been held by the Commissioner (Appeals), these refund claims had been resubmitted on 26/06/04 and 24/06/04 and it is the latter dates which should be treated as the dates of filing of refund claims and Department s interest liability will start only after expiry of the period of three months of both dates. On this point, I find that when originally the refund claims had been filed on 04/02/2003 and 11/02/2003, even if the same were resubmitted on 26/06/04 and 24/06/04 consequent to the order of the Commissioner, it is the former dates i.e. 04/02/03 and 11/02/03 which have to be treated as the dates of filing of refund claims and interest liability will be start from the dates on which the three months period from which these dates expired. The impugned order, therefore, is set aside - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Section 11BB regarding interest on refund of unutilized credit.
2. Determination of the correct date of filing refund claims and commencement of interest liability.

Analysis:
1. The judgment addressed the interpretation of Section 11BB concerning interest on the refund of unutilized credit. The appellant's appeal was remanded by the High Court to the Tribunal for reconsideration. The High Court clarified that Section 11BB does not distinguish between the refund of Cenvat credit and other duties, emphasizing that interest is payable for delays in refunding Cenvat credit. The Tribunal's previous decision denying interest on Cenvat credit refunds was set aside, and the matter was remitted for a fresh decision, excluding the conclusion on interest payment.

2. The case involved the correct determination of the date of filing refund claims and the commencement of interest liability. The appellant, a manufacturer of flock fabrics, faced issues with unutilized AED (T&TA) credit. The Tribunal permitted cross-utilization of the credit for other duties. The appellant filed refund claims, which were initially disallowed but later allowed by the Commissioner (Appeals). However, the Tribunal upheld the denial of interest on the refund. During the current hearing, the appellant argued that interest should be paid based on the original filing dates of the refund claims, while the Department contended that interest should start from the resubmission dates. The Tribunal ruled in favor of the appellant, stating that the original filing dates determined the commencement of interest liability, overturning the previous decision and allowing the appeals with consequential relief.

This detailed analysis of the judgment highlights the key legal issues, interpretations of relevant sections, and the Tribunal's decision based on the arguments presented by both parties.