2015 (10) TMI 1364 - AT - Central Excise

Demand of interest - Whether the respondent-assessee under the facts and circumstances is entitled to interest from the date of enactment of Section 11BB as already allowed or whether the respondent-assessee is entitled to interest from the expiry of 3 months from the date of its application and/or order of this Tribunal dated 25 th of June, 2007 - Held that - The explanation appearing below proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Asst. Commissioner of Central Excise or Dy. Commissioner but by an appellate authority or the Court, then for the purpose of this of the section the order made by such higher appellate authority or by the Court shall be deemed to be on order made under subsection 2 of Section 11B of the Act. It is clear that the explanation under Section 11BB of the Act. Manifestly interest under Section 11 BB of the Act becomes payable, if on an expiry of period of 3 months from the date of receipt of the application for refund, the amount claimed is not so refunded. Thus, the only interpretation of section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of 3 months from the date of receipt of the application under sub section 1 of Section 11BB of the Act becomes payable. - board have directed that responsibility should be fixed for not disposing of the refund claims within 3 months from the date of receipt of the application. Thus the Hon ble Apex Court noticed that ever since Section 11BB was inserted in the Act with effect from 26/5/95 the department has taken the consistent stand about its interpretation. That it is evident that interest is payable from the date of expiry of 3 months from the date of receipt of application under Section 11B(1) of the Act. - impugned order does not suffer from any illegality or impropriety - Decided against Revenue.

Summary

Issues involved:
Commencement of interest payment period under Section 11BB of the Central Excise Act.

Detailed Analysis:

Issue 1: Commencement of interest payment period under Section 11BB:
The appeal concerns the commencement of the interest payment period for delayed refunds under Section 11BB of the Central Excise Act. The primary question is whether the liability of the Revenue to pay interest commences from the date of expiry of 3 months from the receipt of the refund application or from the date of the refund order. The Revenue argues that interest should be payable from 3 months after the appellate order, while the respondent asserts that interest should be paid from the date of application or order. The Commissioner's order, supported by the Bombay High Court's ruling, clarifies that interest under Section 11BB becomes payable after 3 months from the application date, irrespective of the authority issuing the refund order. The Hon'ble Supreme Court in a similar case affirmed that interest is due after 3 months from the application date, as per Section 11BB provisions. The Apex Court also referenced a CBEC Circular emphasizing interest payment for refunds sanctioned beyond 3 months. Consequently, the respondent's appeal for dismissal of the Revenue's claim is supported by legal precedent and statutory interpretation.

Conclusion:
After evaluating the arguments and legal precedents, the Tribunal found no fault with the Commissioner's order, which aligns with the Bombay High Court's ruling and the Supreme Court's decision. Therefore, the appeal by the Revenue is dismissed, affirming the commencement of interest payment under Section 11BB from 3 months after the application date, as per the statutory provisions and judicial interpretations.