2017 (5) TMI 618 - AT - Central Excise

Refund claim - Interest paid on the duty - provisional assessment - refund claim filed on the ground that the interest was not payable in respect of excise duty paid before finalisation of the assessment - rejection of refund on the ground that since the interest was not payable whatever amount was paid is an amount and no provision for refund of such amount - time limitation - Held that - the appellants have paid interest in respect of duty paid before the finalisation of the assessment. In case duty paid before the finalisation of the assessment, interest is not chargeable as held by the Hon ble Bombay High Court in the case of CEAT 2015 (2) TMI 794 - BOMBAY HIGH COURT - The appellant admittedly paid the amount as interest and if it is not payable, the same is refundable, even if not u/s 11B otherwise also as the said amount which is not payable cannot be retained by the Government without authority of law. Time limitation - Held that - the refund has arisen only after finalisation of the assessment and the appellant have admittedly filed the refund claim within one year from the date of finalisation. Therefore, it is clearly not time barred. Unjust enrichment - Held that - the lower authorities have not examined the issue of unjust enrichment. Therefore, the matter needs to be remanded only for the verification of aspect of unjust enrichment. Appeal allowed - refund allowed subject to verification on the aspect of unjust enrichment - appeal allowed by way of remand.

Summary

Issues:
Refund claim for interest paid on excise duty before finalization of assessment, rejection of refund claim by adjudicating authority, time bar for filing refund claim, aspect of unjust enrichment.

Analysis:
1. Refund Claim for Interest Paid Before Finalization of Assessment:
The appellant paid excise duty during provisional assessment and also paid interest on it. After finalization, a refund claim was filed for the interest paid, contending that interest was not payable on duty paid before finalization. The adjudicating authority rejected the claim, stating the interest paid was not refundable. The Commissioner (Appeals) upheld the rejection. The appellant argued that any excess amount paid should be refunded, citing various judgments. The Tribunal held that interest paid on duty before finalization is not chargeable, making it refundable. The lower authorities' reasoning that the interest paid was not refundable was dismissed, and the appellant's claim was accepted.

2. Time Bar for Filing Refund Claim:
The Revenue argued that the refund claim was time-barred as it was not filed within one year from the interest payment date. However, the appellant contended that the claim was filed within three months of assessment finalization, well within the time limit. The Tribunal agreed with the appellant, stating that the refund claim was not time-barred as it was filed within one year from finalization, not from the interest payment date.

3. Aspect of Unjust Enrichment:
The Revenue raised the issue of unjust enrichment, stating that the lower authorities did not verify this aspect. They requested a remand for verification. The Tribunal agreed that the issue of unjust enrichment was not examined by the lower authorities. Therefore, the matter was remanded to the adjudicating authority for reconsideration of the refund claim in light of unjust enrichment, emphasizing the need for verification on this aspect.

In conclusion, the Tribunal allowed the appeal by remanding the case to the adjudicating authority for further consideration of the refund claim, emphasizing the refundability of interest paid on duty before finalization, the absence of time-bar for filing the claim, and the necessity to verify the aspect of unjust enrichment.