2015 (1) TMI 1181 - AT - Central Excise

Interest on the delayed payment of refund - Held that - In the case of ITC - 2004 (12) TMI 90 - SUPREME COURT OF INDIA , the Hon ble Apex Court held that the amount deposited while considering the stay application as duty and if that is required to be refunded the same should be refunded within three months from the date of application of refund. C.B.E. & C. vide Circular No. 387/5/2001-JC, dated 25-10-2004 held that the application for refund of pre-deposit has to be decided within three months from the date of disposal of the appeal, if not, the interest is payable. Following the above decisions, the learned Commissioner (Appeals) granted interest on the delayed refund. I do agree with the observations made by the learned Commissioner (Appeals) in the impugned order. Therefore, I do not find any infirmity with the impugned order and the same is upheld. - Decided against Revenue.

Summary

Issues:
- Appeal against granting interest on delayed payment of refund
- Applicability of Section 11B of the Central Excise Act, 1944 to pre-deposit
- Interpretation of previous court decisions regarding refund timelines and interest

Analysis:
1. The appeal before the Appellate Tribunal CESTAT MUMBAI concerned the grant of interest on delayed payment of a refund. The respondent had initially made a pre-deposit of &8377; 1.5 crore during the first round of litigation. Subsequently, upon a favorable decision by the Tribunal, the respondent filed a refund claim for the pre-deposit, which was sanctioned after a delay of almost 16 months. The issue at hand was whether interest should be paid on the delayed refund amount.

2. The learned AR representing the Revenue argued that Section 11B of the Central Excise Act, 1944, which pertains to the refund of duty, was not applicable to pre-deposits. Therefore, it was contended that interest on the delayed refund was not payable. However, the Tribunal referred to a Supreme Court decision and a circular by the C.B.E. & C., which established that if a refund of pre-deposit is not decided within three months from the date of disposal of the appeal, interest becomes payable. The Tribunal concurred with the findings of the learned Commissioner (Appeals) who had granted interest on the delayed refund in line with the aforementioned legal precedents.

3. Citing the Supreme Court case and the circular, the Tribunal upheld the decision of the learned Commissioner (Appeals) to grant interest on the delayed refund. Consequently, the Tribunal dismissed the appeal filed by the Revenue and also disposed of the Cross Objection filed by the respondent, thereby affirming the entitlement to interest on the delayed payment of the refund.

This detailed analysis outlines the key issues addressed in the judgment, the arguments presented by the parties, and the legal basis on which the Tribunal made its decision regarding the payment of interest on delayed refund amounts.