2016 (12) TMI 96 - HC - Central Excise

Delayed payment of rebate claim - Section 11-BB of the Central Excise Act, 1944 - Held that - the liability of the Revenue to pay interest under Section 11-BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11-B(1) of the Act and not on the expiry of the said period from the date on which the order of refund is made - the revenue directed to pay interest in accordance with Section 11-BB of the Act of 1944 to the petitioner calculating such interest on and from expiry of three months from the date of making of the application for refund - petition allowed - decided in favor of petitioner-assessee.

Summary

Issues:
Claim for interest on refunded amount under Section 11-BB of the Central Excise Act, 1944.

Analysis:
The petitioner claimed interest on the refunded amount by the Central Excise Authorities under Section 11-BB of the Central Excise Act, 1944. The petitioner contended that it was entitled to a rebate and had applied for the same. While some rebate claims were allowed, others were rejected. The issue arose when the order allowing the rebate did not address the matter of interest payment on the delayed rebate claim. The revisional authority rejected the claim for interest, prompting the petitioner to seek relief from the court.

The petitioner relied on a previous judgment, Ranbaxy Laboratories Ltd. vs. Union of India & Ors., which determined that the entitlement to receive interest on delayed payment of rebate commences from the date of receipt of the refund application under Section 11-B(1) of the Act, not from the date of refund. The respondent argued that the refund application had technical deficiencies, disqualifying the petitioner from claiming interest for that period. The court examined the arguments and evidence presented by both parties.

Referring to the judgment in Ranbaxy Laboratories Ltd., the court held that the liability of the Revenue to pay interest under Section 11-BB of the Act starts from the expiry of three months from the date of receipt of the refund application, not from the date of refund order. The court found that while the original refund application may have had deficiencies, the petitioner had indeed applied for a refund, and the alleged procedural violations were not proven by the respondent.

Consequently, the court directed the revenue to pay interest to the petitioner in accordance with Section 11-BB of the Act, starting from the expiry of three months from the date of the refund application. The impugned order was set aside, and no costs were awarded. The judgment favored the petitioner's claim for interest on the refunded amount, emphasizing the correct interpretation of the law regarding the commencement of interest payment under Section 11-BB of the Central Excise Act, 1944.