2018 (6) TMI 44 - AT - Service Tax

Interest on delayed refund - relevant date - maturity of refund as per the Tribunal order - appellant claims that they are entitled for the interest right from the date of deposit of the amount - Section 11 BB of CEA - principle of restitution not applicable - Held that - As per Section 11BB, the interest is payable from three months from the date of application. Except the provision of Section 11BB, there is no provision by which the interest can be granted from the date of deposit - This Tribunal, being a creature under the statute of Central Excise Act, cannot go beyond the statutory provision made under that Act. The interest is not payable from the date of deposit, but it is payable only after three months of filing the application - As per provision of Section 11B(5)(B)(ec), the refund becomes matured only as a consequence of the Appellate Tribunal s order. When the refund itself is not matured prior to the date of Appellate Tribunal s order, there is no question of interest for the period prior to the date of order. The Apex Court decision in the case of ONGC Ltd. vs. CC 2007 (8) TMI 346 - SUPREME COURT OF INDIA are factually different and do not apply to the present case. The Hon ble Supreme Court, under the inherent power of the apex court on the principle of restitution, granted the interest from the date of deposit. However, the statutory provision under the Customs Act i.e. Section 27 of the Customs Act, 1962 has not been considered. The entire case was decided on the principle of restitution - therefore, the facts of the case are entirely different. Larger Bench of this Tribunal in the case of Indian Thermoplastics (P) Ltd. 2003 (12) TMI 84 - CESTAT, NEW DELHI has held that the relevant date for completion of period for grant of interest is from the date of expiry of three months from the date of receipt of final order of the Tribunal till the date of payment. Therefore, the interest is not payable from the date of deposit. The appellant is not entitled for the interest from the date of deposit of the demand amount - appeal dismissed - decided against appellant.

Summary

Issues:
1. Entitlement to interest on refund application.
2. Interpretation of Section 11BB regarding payment of interest.
3. Applicability of judgments cited by both parties.
4. Maturity of refund and entitlement to interest.

Analysis:

Issue 1: Entitlement to interest on refund application
The appellant deposited the adjudged dues confirmed by the order-in-original, filed an appeal challenging the demand order, and subsequently filed a refund application after the appeal was allowed. The appellant claimed interest from the date of deposit. The Deputy Commissioner argued that interest is payable under Section 11BB from three months of filing the refund application, not from the date of deposit. The Tribunal observed that interest is payable as per Section 11BB from three months of application filing, not from the date of deposit. The Tribunal distinguished judgments cited by the appellant, emphasizing that interest accrues only after three months from the application date.

Issue 2: Interpretation of Section 11BB regarding payment of interest
Section 11BB provides for interest on delayed refunds, payable from three months after the application date. The Tribunal held that interest is not payable from the date of deposit but only after three months from the application date. The Tribunal emphasized that it cannot go beyond statutory provisions and must adhere to the specific provisions of the Central Excise Act.

Issue 3: Applicability of judgments cited by both parties
The appellant relied on judgments such as ONGC Ltd. and Futura Ceramics Pvt. Ltd., arguing for interest from the date of deposit. However, the Tribunal distinguished these judgments, stating that they are not applicable in the present case where the refund provision is under Section 11B. The Tribunal also highlighted judgments by the Supreme Court and the Larger Bench of the Tribunal, emphasizing that interest is not payable from the date of deposit.

Issue 4: Maturity of refund and entitlement to interest
The Tribunal clarified that the refund becomes matured only as a consequence of the Appellate Tribunal's order. Since the refund was not matured prior to the date of the Appellate Tribunal's order, interest for the period before that date is not applicable. Consequently, the Tribunal dismissed the appeal, stating that the appellant is not entitled to interest from the date of deposit of the demand amount.

This detailed analysis of the judgment addresses the issues of entitlement to interest on refund applications, interpretation of Section 11BB, applicability of cited judgments, and the maturity of refunds in relation to interest entitlement.