2014 (12) TMI 820 - CGOVT - Central Excise

Interest on belated rebate claim - expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made - Held that - Commissioner (Appeals) has rightly held that rebate claims were sanctioned belatedly and interest is payable under section 11BB from the date of expiry of three months from the date of filling said claims. Government finds no infirmity in the orders of Commissioner (Appeals) and therefore upholds the same. - Following decision of Ranbaxy Laboratories Ltd. Versus Union Of India and Ors. 2011 (10) TMI 16 - Supreme Court of India - Decided against Revenue.

Summary

Issues:
1. Eligibility of rebate claims and interest payment.
2. Interpretation of Section 11BB of the Central Excise Act, 1944.
3. Applicability of judicial precedents on interest payment on rebate claims.

Analysis:

1. Eligibility of Rebate Claims and Interest Payment:
The case involved a dispute regarding rebate claims filed by the respondent, which were initially rejected by the lower authority on the grounds of double claiming benefits. The respondent had availed the benefit of exemption under Notification No. 39/2001-CE and self-re-credit of duty paid through PLA account. The Circulars issued by the CBEC also played a crucial role in the rejection of rebate claims. However, the High Court and subsequently the Supreme Court rulings in similar cases supported the respondent's claim, leading to the approval of rebate claims. The issue of interest payment on the delayed rebate claims was also contested, with the department arguing against the payment based on legal precedents and timelines mentioned in the Central Excise Act.

2. Interpretation of Section 11BB:
The Government analyzed the provisions of Section 11BB of the Central Excise Act, 1944, which govern the payment of interest on delayed refund or rebate claims. The Hon'ble Supreme Court's judgment in the case of M/s Ranbaxy Laboratories Ltd. v. UOI clarified that interest becomes payable after the expiry of three months from the date of receipt of the application for refund. The interpretation emphasized strict adherence to the statutory provisions without room for implied meanings. The Government highlighted the significance of the Supreme Court's ruling in determining the commencement of interest payment under Section 11BB.

3. Applicability of Judicial Precedents on Interest Payment:
The Government referred to another case involving M/s Jindal Drugs, where the Bombay High Court upheld the payment of interest on rebate claims after the expiry of three months from the date of application. The High Court's observations reiterated the settled position in law regarding the liability of the Revenue to pay interest under Section 11BB. The judgments in both cases supported the payment of interest on delayed rebate claims, emphasizing the importance of following statutory timelines and legal interpretations. Consequently, the Government upheld the decisions of the Commissioner (Appeals) in sanctioning the rebate claims and ordering the payment of interest as per Section 11BB.

In conclusion, the Government rejected the Revision Applications, affirming the decisions regarding the eligibility of rebate claims and the payment of interest as per the provisions of the Central Excise Act and judicial precedents.