2016 (10) TMI 448 - AT - Central Excise

Interest on delayed refund - whether the interest on delayed refund to the appellant is to be paid from the expiry of three months from the date of fling of refund claim or from the date of order of refund made - refund application was submitted on 20.05.2002 and refund was sanctioned on 29.12.2005 - Held that - the Hon ble Supreme Court has ruled that respondent has to pay interest under Section 11BB of Central Excise Act 1944 from the date of expiry of three months from the date of receipt of refund application and not on the expiry of said period from the date on which order or refund is made. The date of expiry of three months in the present case is 21.8.2002. - Interest on refund allowed - Decided in favour of appellant.

Summary

Issues:
Claim of refund, provisional assessment, Consumer Welfare Fund credit, Order-in-Original, Order-in-Appeal, interest on delayed refund, Writ Petition, High Court directions, remand by Commissioner (Appeals), non-speaking order, Section 11BB of Central Excise Act, appeal against Order-in-Original, appeal against Order-in-Appeal, interest payment period, Hon'ble Supreme Court ruling.

Analysis:

The case involved the appellant's claim of refund after finalization of provisional assessment, which was initially credited to the Consumer Welfare Fund. The appellant appealed against the Order-in-Original granting a partial refund, leading to a subsequent Order-in-Appeal by the Commissioner (Appeals) awarding a refund amount. The appellant sought interest on the refund as per the law, which was not addressed in the subsequent Order-in-Original. This led to a Writ Petition before the High Court, directing a fresh representation and a decision within a specified timeframe. The Assistant Commissioner then granted the refund but omitted the interest component, resulting in a challenge by the appellant on the grounds of a non-speaking order. The matter was remanded by the Commissioner (Appeals) for a speaking order, which was again challenged by the appellant as the interest was denied based on the timing of the refund sanction.

The appellant contended that interest should have been paid as per Section 11BB of the Central Excise Act, 1944, from the date of the refund application to the date of refund sanction. Citing the relevant provision and explanations, along with supporting case laws, the appellant argued for the interest payment. The Counsel for the appellant emphasized the timeline and the legal obligation for interest payment, referring to a Supreme Court ruling in a similar context. The Counsel for Revenue supported the previous order denying interest.

Upon careful consideration, the Tribunal referred to the Supreme Court ruling, clarifying that interest under Section 11BB of the Act accrues from the expiry of three months from the refund application date, not from the refund order date. As the refund application was filed on a specific date, the Tribunal directed the Original Authority to ensure the payment of interest on the principal amount within a stipulated period. Consequently, the appeal was allowed, and the interest payment was ordered in accordance with the legal provisions and precedents.

This comprehensive analysis highlights the procedural complexities, legal interpretations, and the ultimate resolution of the issue of interest on delayed refund as per the Central Excise Act and relevant judicial precedents.