2017 (12) TMI 596 - AT - Service Tax

Interest on refund - Section 11BB of Central Excise Act, 1944 - case of appellant is that when the refund applications were filed on the respective dates in respect of the amounts stated in the Table, such refund not being granted by the Authority below, it is entitled to interest - Held that - Bare perusal of the statutory provision in Section 11BB of the Act throws light that Section 11BB comes into operation only after an order of refund has been made under Section 11B of Central Excise Act, 1944. This is the pre-requisite for grant of refund. In the present case of the appellant, right to refund arose only in terms of order of Tribunal which was passed on 10.2.2016. If Revenue has not granted refund within three months of filing of application in terms of such order, it is entitled to interest thereafter. Learned adjudicating authority is therefore directed to examine whether refund application was filed in terms of order dated 10.2.2016 and whether such refund applications were disposed of within three months thereof. Appeal allowed by way of remand.

Summary

Issues:
Refund applications filed by the appellant, entitlement to interest under Section 11BB of Central Excise Act, 1944, interpretation of Section 11BB, applicability of Apex Court and Bombay High Court judgments, contention of Revenue, pre-requisite for grant of refund, explanation under Section 11BB, right to refund, entitlement to interest, examination of refund applications, direction for adjudicating authority, remand of appeals, retrospective interest grant, conclusion of lis.

Analysis:
The appellant filed refund applications on specific dates for different periods, seeking interest under Section 11BB of the Central Excise Act, 1944. The appellant relied on the Apex Court judgment in Ranbaxy Laboratories Ltd. Vs. UOI and the decision of the Bombay High Court in CCE, Pune-III Vs. Ballarpur Industries Ltd. to support its claim for interest when refunds are not granted within three months of application filing. The Revenue opposed the appellant's contentions, leading to a dispute on the interpretation of the relevant legal provisions.

The crux of the issue lies in the interpretation of Section 11BB, which mandates that interest is payable only after an order for refund has been made under Section 11B of the Act. The Apex Court's judgment emphasized this point, clarifying that interest becomes payable if the claimed amount is not refunded within three months from the date of the refund application. The explanation under Section 11BB further highlights that orders for refund by higher authorities are deemed as orders under Section 11B(2), triggering the right to interest if refunds are delayed beyond three months.

In this case, the appellant's right to refund arose from the Tribunal's order dated 10.2.2016. The Tribunal directed the adjudicating authority to assess whether refund applications were filed in compliance with the said order and if refunds were not granted within three months. If there was a delay, the appellant would be entitled to interest. However, the appellant's argument for retrospective interest from the beginning of the dispute was deemed untenable, as the lis concluded with the Tribunal's order.

Consequently, all six appeals were remanded to the adjudicating authority for a detailed examination based on the legal principles elucidated in the judgment. The decision emphasized the importance of a valid order under Section 11B(2) for the entitlement to interest, clarifying that interest does not accrue merely from filing refund applications without such an order. The judgment concluded by disposing of the appeals in line with the directions provided for further assessment by the adjudicating authority.