2015 (11) TMI 147 - HC - Central Excise

Claim of interest on refund - Non compliance with order of court wherein petitioner were granted interest - Held that - in compliance of the order dated 02.03.2012 passed by this Court, the respondent Department had sanctioned refund of ₹ 4,40,742/- including interest amount of ₹ 1,54,668/- to the petitioner vide Order-in-Original dated 12.04.2012. As per the respondent, the correct interest amount on the date of sanctioning of refund on 12.04.2012 comes to ₹ 1,54,668/-. - since the respondent Department is duty bound to pay the interest amount in favour of the petitioner, therefore, three months time is granted to the respondent Department to comply with the order passed by the Commissioner (Appeals), failing which the petitioner shall be entitled for an amount of ₹ 50,000/- in addition to the interest due. - Petition disposed of.

Summary

Issues: Compliance with court order for payment of duty and interest. Calculation of interest amount due. Adjustment of sanctioned refund against confirmed demand. Validity of interest payment date.

Compliance with Court Order for Payment of Duty and Interest:
The petitioner raised a grievance that the order dated 02.03.2012 by the Division Bench of the Court had not been fully complied with as the entire duty amount along with interest had not been disbursed within the stipulated six weeks. Subsequently, the petitioner was directed to prepare a calculation sheet to determine the amount due. The respondent argued that the interest payment was governed by specific sections of the Central Excise Act and that the duty became refundable following a final order by the CESTAT. The respondent Department had sanctioned a refund, including interest, which was adjusted against the confirmed demand of the petitioner.

Calculation of Interest Amount Due:
The petitioner submitted a calculation sheet claiming an interest amount of Rs. 3,31,077 under Section 11BB of the Central Excise Act. The respondent contended that interest became payable from a specific date based on the refund application filed by the petitioner. The correct interest amount sanctioned by the respondent Department was Rs. 1,54,668 as of the date of refund.

Adjustment of Sanctioned Refund Against Confirmed Demand:
The sanctioned refund, including interest, was adjusted against the confirmed demand of the petitioner as there was no stay against the demand at the time of adjustment. The confirmed demand had been upheld in various proceedings, with the final order by the CESTAT setting aside the earlier decision and allowing the appeal of the petitioner.

Validity of Interest Payment Date:
The respondent initially issued a cheque for a specific amount in favor of the petitioner, which was later cancelled and reissued. The petitioner challenged an order related to interest payment before the First Appellate Authority, which ruled in favor of the petitioner, stating entitlement to interest from a specific date. The respondent Department was examining this order.

Conclusion:
The Court granted three months to the respondent Department to comply with the order for interest payment. Failure to comply within the specified time would entitle the petitioner to an additional amount of Rs. 50,000 along with the interest due. The petition was disposed of, and a copy of the order was provided to the respective counsels.