2016 (4) TMI 885 - AT - Central Excise

Claim of interest at the rate of 12% - Delayed sanctioned of refund of pre-deposit - Appellant contended that Hon ble Supreme Court has allowed the 12% interest as per the judgment of ITC - Held that - only provision granting interest on delayed refund is provided under Section 11BB of Central excise Act, 1944 therefore interest shall be payable as per the rate prescribed under Section 11BB. Tribunal is creature under the Central Excise Act therefore has limited power to decide the case only as per the statute of Central Excise Act. As regard the 12% interest granted by the Hon ble Supreme Court, in my view it is under inherent power of the Hon ble Supreme Court which can not be made precedence and can not be applied in each and every case. Regarding the Circular dated 18/12/2004 the Board has directed to field formation to grant refund of pre-deposit within the three months from the date of order. However, the Board has not prescribed any rate of interest which obviously board can not prescribe the rate which is otherwise provided under Section 11BB and notification issued thereunder. Therefore the order passed by the Ld. Commissioner (Appeals) is proper and legal which does not require any interference hence the same is upheld. However since the Ld Commissioner (Appeals) has already allowed the interest at the rate of 8%/6% depending upon the period, the Adjudicating Authority shall grant interest as ordered by the Commissioner(Appeals). - Decided against the appellant

Summary

Issues Involved:
- Entitlement to interest on delayed payment of refund
- Applicability of interest rate on delayed refund
- Interpretation of Section 11BB of the Central Excise Act
- Consideration of Hon'ble Supreme Court judgment and Board Circular

Entitlement to Interest on Delayed Payment of Refund:
The appeal in this case was against an Order-in-Appeal that allowed the appellant's claim for interest on delayed payment of refund. The appellant sought interest at a rate of 12% on a pre-deposit refund. The appellant relied on a judgment by the Hon'ble Supreme Court in CCE vs. ITC, where 12% interest was allowed on delayed refunds. The appellant contended that they were entitled to the same interest rate based on this precedent.

Applicability of Interest Rate on Delayed Refund:
The Ld. Commissioner (Appeals) had allowed interest on the delayed refund at the rate applicable during the period under reference as per the notification issued under Section 11BB of the Central Excise Act. On the other hand, the Revenue argued that there is no statutory provision for granting interest at a rate of 12%, emphasizing that interest on refund is provided under Section 11BB, and the appellant should only receive interest as per the rate prescribed in the notifications issued under Section 11BB.

Interpretation of Section 11BB of the Central Excise Act:
The Tribunal analyzed Section 11BB of the Central Excise Act, which is the only provision granting interest on delayed refunds. The Tribunal held that interest shall be payable as per the rate prescribed under Section 11BB. While acknowledging the Hon'ble Supreme Court's decision allowing 12% interest in a specific case, the Tribunal clarified that it had limited power to decide cases only as per the statute of the Central Excise Act. The Tribunal emphasized that the Supreme Court's decision on interest rates could not be applied universally and that the Board's Circular did not prescribe an interest rate, as it is governed by Section 11BB.

Consideration of Hon'ble Supreme Court Judgment and Board Circular:
The Tribunal upheld the Ld. Commissioner (Appeals)'s order, stating that it was proper and legal, requiring no interference. The Tribunal dismissed the appeal while directing the Adjudicating Authority to grant interest at the rate ordered by the Commissioner (Appeals), either 8% or 6% depending on the period. The Tribunal highlighted that the Board's Circular could not override the statutory provisions of Section 11BB and the notifications issued thereunder, emphasizing the limitations of the Tribunal's authority under the Central Excise Act.

In conclusion, the Tribunal affirmed the decision of the Ld. Commissioner (Appeals) regarding the interest rate on delayed refunds, emphasizing the statutory provisions of Section 11BB and the limited scope of the Tribunal's authority in deciding cases under the Central Excise Act.