2015 (4) TMI 574 - AT - Service Tax

Interest claim on refund claim - Assessee demand interest after three months from the date of filing of refund claims till the date of refund claimed were paid to the appellant under Section 11B and Section 11BB of the Central Excise Act, 1944 which has been denied by the lower authorities - Held that - Following decision of Ranbaxy Laboratories Limited vs. UOI 2011 (10) TMI 16 - Supreme Court of India - appellant is entitled to interest after three months from the date of filing of refund claims to the date of payment of refund amounts, as the date of calculating interest does not get postponed by the favourable decision given by the higher appellate authority - Decided in favour of assessee.

Summary

Issues: Interpretation of Section 11BB of the Central Excise Act, 1944 regarding the payment of interest on refund claims.

Analysis:
1. The appellant filed an appeal against the rejection of refund claims by the adjudicating authority, which was upheld by the first appellate authority. The appellant argued that they are entitled to interest under Section 11B and Section 11BB of the Central Excise Act, 1944, citing the judgment in the case of Ranbaxy Laboratories Limited vs. UOI [2011 (273) ELT 3 (SC)]. The appellant contended that interest should be paid from the date of filing the refund claims until the date of actual payment. The CESTAT had allowed the appellant's appeal against the Order-in-Appeal and sanctioned a partial refund. The appellant claimed interest beyond the refunded amount.

2. The authorized representative for the Revenue defended the OIA passed by the first appellate authority, stating that the refund claims were sanctioned and paid within three months from the CESTAT's order. The Revenue argued against the payment of interest beyond the refunded amount, emphasizing the timely refund made within the stipulated period after the CESTAT's decision.

3. The Tribunal analyzed the relevant provisions of Section 11BB of the Central Excise Act, 1944, particularly referring to the judgment in the case of Ranbaxy Laboratories Limited vs. UOI [2011 (273) ELT 3 (SC)]. The Tribunal highlighted the interpretation that interest becomes payable after three months from the date of receipt of the refund application, regardless of subsequent favorable appellate decisions. The Tribunal emphasized that interest under Section 11BB is triggered by the expiry of three months from the application date, not from the date of the refund order. Citing previous legal precedents, the Tribunal concluded that the appellant is entitled to interest from the date of filing the refund claims until the actual payment date, as per the strict construction of fiscal legislation.

4. The Tribunal allowed the appeal filed by the appellant, ruling in favor of the appellant's entitlement to interest on the refund claims from the date of filing until the payment date. The judgment clarified that the liability of the Revenue to pay interest under Section 11BB commences from the expiry of three months from the date of the refund application, irrespective of subsequent appellate decisions. The decision aligned with the strict interpretation of fiscal legislation, ensuring the appellant's right to interest on the refunded amount beyond the initial refund sanctioned by the authorities.