2016 (12) TMI 842 - AT - Central Excise

Entitlement to interest - Section 11BB of Central Excise Act, 1944 - period for calculation of interest - Held that - The provisions of Section 11BB of Central Excise Act, 1944 are very clear that wherever the refund is due to the assessee and the applicant assessee is not refunded the said refund from the date of receipt of application, the applicant is to be paid interest at the prescribed rate from the date immediately after the expiry of three months from the date of receipt of application till the date of payment of refund . Hon ble Supreme Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India 2011 (10) TMI 16 - Supreme Court of India further makes it clear that the assesse would be entitled to the interest on the amount of refund if it is granted after the expiry of three months from the relevant date i.e. for the period after the expiry of 3 month period, till the date of granting of refund. Appeal dismissed - decided against Revenue.

Summary

Issues: Entitlement to interest on delayed refund payment.

Analysis:
The appeal before the Appellate Tribunal CESTAT Kolkata involved the entitlement to interest on a delayed refund payment. The Commissioner of Central Excise, Kolkata-III filed an appeal against an Order-in-Appeal that found the assessee entitled to interest for the period after the expiry of three months from the date of filing the refund application. The Revenue argued that since the refund was given within three months from the date of the Commissioner (Appeals) order, there should be no claim for interest by the assessee.

The Tribunal considered the arguments presented by both sides. The Revenue contended against payment of interest for the period after three months from the refund application date. However, the Tribunal noted that Section 11BB of the Central Excise Act, 1944 clearly states that if a refund is due to the assessee and not refunded from the date of the application, interest is payable at the prescribed rate from the expiry of three months from the application date until the refund payment date.

Furthermore, the Tribunal referred to a decision by the Hon'ble Supreme Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India, which emphasized that interest on a refund is payable if granted after the expiry of three months from the relevant date. The Supreme Court clarified that the liability of the revenue to pay interest under Section 11BB of the Act starts from the expiry of three months from the application date, not from the date of the refund order.

Based on the analysis of the legal provisions and the Supreme Court decision, the Tribunal concluded that there was no merit in the Revenue's appeal. Therefore, the Tribunal rejected the Revenue's appeal, upholding the impugned order that found the assessee entitled to interest for the delay in refund payment.