2015 (11) TMI 450 - AT - Central Excise

Interest in refund claim - whether the appellant is entitled to interest on the expiry of three months from the date of filing the application or on the expiry of this same period from the date on which the order of refund was made. - Held that - refund claim was filed by appellant on 28/05/2010. According to the appellant they are entitled to interest from 28/08/2010 onwards as per the provisions of law. The Commissioner (Appeals) has taken the view that as the appellant was sanctioned refund by the order in Appeal No. 426/SVS/ GGN/2012 dated 23/10/2012 the appellant is entitled to interest on expiry of three months from of the date of order i.e.; from 31/01/2013 onwards. The Commissioner (Appeals) has interpreted section 11BB of the Central Excise Act, 1944 and held that as the refund claim was sanctioned vide order dated 23/10/2012 and the same was hand-delivered along with the request letter dated 25/10/2012 by the appellant in the office of the respondent on 31/10/2012, the date of receipt of application for a refund has to be treated as 31/10/2012 and not as 28/05/2010. - appellant had filed the claim for refund on 28/05/2010. Therefore as laid down by the Hon ble Supreme Court in the above decision the appellant is entitled to interest on the expiry of three months from the date of filing the application of refund. In such circumstances, the appellant herein is entitled to interest from 28/08/2010 to 14/02/2013 on which date the claim of refund was sanctioned/the crossed cheque was given. - Decided in favour of assessee.

Summary

Issues:
- Entitlement to interest on refund amount
- Interpretation of Section 11BB of the Central Excise Act, 1944

Analysis:
1. The appellants, engaged in manufacturing and exporting silencers for diesel engines, filed a refund claim for unutilized Cenvat credit due to exporting final goods. The claim was initially rejected by the Assistant Commissioner, citing non-compliance with Rule 5 of Cenvat Credit Rules.

2. The appellants appealed the rejection, leading to a series of orders and appeals. The Commissioner (Appeals) eventually allowed the refund claim but did not grant interest on the refunded amount. The appellants then filed another appeal seeking interest from an earlier date.

3. The main issue was whether the appellant was entitled to interest from the date of filing the refund claim or from the date the refund order was made. The Commissioner (Appeals) held that interest should start from the date of the refund order, not the claim filing date.

4. The appellant argued that interest should accrue from the date of filing the refund claim, relying on a Supreme Court decision in Ranbaxy Laboratories Ltd vs Union of India. The Supreme Court decision clarified that interest under Section 11BB of the Central Excise Act begins from the expiry of three months from the date of the refund claim filing.

5. Considering the Supreme Court precedent, the Tribunal held that the appellant was entitled to interest from three months after the filing date of the refund claim until the refund was sanctioned. Consequently, the Tribunal allowed the appeal and modified the order to include interest on the refunded amount from the filing date to the sanction date.

6. The Tribunal's decision aligned with the legal interpretation provided by the Supreme Court, emphasizing that interest on delayed refunds commences from the date of application filing, not the order date. As a result, the appellant was granted interest on the refunded amount from the appropriate starting date to the sanction date.

7. In conclusion, the Tribunal allowed the appeal, directing the payment of interest to the appellant on the refund amount from the specified start date to the date of sanction, in accordance with the legal provisions and the Supreme Court's interpretation.

Judgment: The appeal was allowed, and the impugned order was modified to include interest on the refunded amount from the filing date to the sanction date.