2018 (5) TMI 1109 - AT - Central Excise

Interest on refund - relevant date, from which Revenue is liable to pay interest - Held that - the respondent-assessee is eligible for interest on the amount after the expiry of three months from the date of refund application till the date cash refund - issue is settled in the case of Ranbaxy Laboratories Ltd. v, Union of India 2011 (10) TMI 16 - Supreme Court of India wherein their Lordships have settled the law inasmuch as that interest liability arises on Revenue authorities after the expiry of three months from the date of application for refund - appeal dismissed - decided against Revenue.

Summary

Issues: Grant of interest on refunded amount

In the judgment delivered by Mr. M.V. Ravindran of the Appellate Tribunal CESTAT MUMBAI, the appeal was directed against Order-in-Appeal No. MKK/50/RGD APP/2017 dated 15.09.2017. The dispute revolved around the classification of excisable goods, with the respondent being the manufacturers. The respondent had deposited an amount with the authorities on 05.09.1988 during the classification dispute, which was later settled in their favor. Subsequently, the respondent claimed a refund of the deposited amount and also sought interest on it from 05.09.1988. The adjudicating authority rejected the interest claim, leading to an appeal where the first appellate authority remitted the matter back to the adjudicating authority. The Revenue contested this decision, arguing that the first appellate authority should not have remitted the matter.

Upon review, Mr. M.V. Ravindran found that the Tribunal could decide the matter without a remand to the adjudicating authority. The crucial issue at hand was the grant of interest on the refunded amount to the respondent-assessee. Referring to the decision of the Hon'ble Apex Court in the case of Ranbaxy Laboratories Ltd. v. Union of India-2011 (73) ELT 3 (SC), it was established that interest liability arises on Revenue authorities after three months from the date of the refund application. Following this legal precedent, it was held that the respondent-assessee was indeed eligible for interest on the refunded amount after the expiry of three months from the refund application until the date of cash refund.

Consequently, the appeal was disposed of in favor of the respondent-assessee, and the cross objection was also disposed of accordingly. The judgment clarified the legal stance on interest entitlement in such cases, aligning with the established law as determined by the Hon'ble Apex Court.