2016 (11) TMI 101 - AT - Central Excise

Entitlement of interest - delayed refund - whether appellant entitled to interest from three months of the filing of their refund application till the sanction of the refund? - adjudicating authority with the claim that there is no delay in sanctioning of refund - Held that - the refund claim was filed by the appellant on 3.9.2001. It is because of the rejection of the refund claim, the matter had travelled upto the Tribunal and as per the Tribunal s order dated 27.9.2003, the department had sanctioned the refund on 19.1.2004. Though the refund was sanctioned as per the order of the Tribunal, but it is the same refund claim which was filed on 3.9.2001. This issue is no longer res integra as the Hon ble Supreme Court in the case of Ranbaxy Laboratories Ltd. 2011 (10) TMI 16 - Supreme Court of India held that the interest on the refund under Section 11BB shall be given from three months of the date of filing the refund application - the appellant is legally entitled for interest from three months of the date of filing the application till the sanction of refund claim - appeal allowed - decided in favor of appellant.

Summary

Issues:
Period for granting interest on refund already sanctioned

Analysis:
The issue in this case revolves around the period for granting interest on a refund that has already been sanctioned. The appellant claimed interest from the filing of their refund application until the refund was sanctioned. The adjudicating authority rejected the interest claim, stating that there was no delay in sanctioning the refund as it was decided by the Tribunal and sanctioned accordingly. The appellant, dissatisfied with this decision, appealed to the Commissioner (Appeals) who upheld the original order, leading the appellant to approach the Tribunal.

The appellant's counsel argued that the refund claim was initially filed on a specific date, rejected, and then ultimately sanctioned after various legal proceedings. Referring to several judgments, including the Supreme Court's decision in Ranbaxy Laboratories Ltd. case, the counsel contended that interest under Section 11BB should be payable from three months of the date of filing the refund application.

On the contrary, the Assistant Commissioner (AR) supported the findings of the impugned order and relied on a judgment of the Calcutta High Court in a similar case. However, after considering both sides' submissions, the Tribunal noted that the refund claim was originally filed on a specific date, leading to subsequent legal proceedings and eventually the sanctioning of the refund. Citing the Supreme Court's decision in the Ranbaxy Laboratories Ltd. case, the Tribunal concluded that interest on the refund under Section 11BB should be calculated from three months of the date of filing the refund application.

In light of the Supreme Court's ruling, the Tribunal held that the appellant was legally entitled to interest from three months of the date of filing the refund application until the refund was sanctioned. Consequently, the impugned order was set aside, and the adjudicating authority was directed to grant the interest to the appellant as requested. The appeal was allowed, and the cross objections filed by the respondent were also disposed of.