2018 (11) TMI 20 - AT - Service Tax

Interest on delayed claim - time limitation - Section 11 B of Central Excise Act - whether the Revenue is liable to pay interest under Section 11 BB of the Act of which commences from the date of expiry of three months from the date of receipt of application for refund or on expiry of the said three months period from the date on which the order of refund is made? Held that - The bare perusal of these provisions makes it clear that the appellant has to file the application praying for refund of any duty of excise and interest within one year from the relevant date i.e. within 1 year from the date of assessee became entitled for that refund. Once such application is made as per Sub-Section 2 of 11B of the Act Assistant Commissioner has to pass an appropriate order and if the refund as claimed is allowed it has to be made within three months of the application as was made by the asseessee under said Section 11 B. The Explanation to Section 11 BB further clarifies the controversy which says that where any order of refund is made by Commissioner (Appeals) Appellate Tribunal, National Tax Tribunal or any Court against the an order of Assistance Commissioner of Central Excise under sub-Section 2 of Section 11 B, the order passed by the Commissioner(Appeals), Appellate Tribunal or as the case may be shall be deemed to be an order passed under the sub-section 2 of the sub-Section B for the purposes of this Section. The period of three months as mentioned in Section 11 BB of the Act is to reckon from the date of application as was filed under Section 11(1) of the Act and not from the application as was filed after the order of refund - the Department without any specific directions was liable to pay the interest. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Liability of the Department to pay interest on refund claim under Section 11BB of the Central Excise Act.

Analysis:

Issue 1: Liability of the Department to pay interest on refund claim under Section 11BB

The case involved an appeal against the rejection of a refund claim by the Commissioner (Appeals) under Section 11 B of the Central Excise Act. The appellant contended that the refund claim was not processed within three months of application, thereby invoking the liability of the Department to pay interest under Section 11 BB. The Department argued that the application was filed after a judgment, hence not eligible for interest. The Tribunal analyzed Sections 11B and 11BB, emphasizing that interest becomes payable if the refund is not made within three months of the application. The Tribunal clarified that interest is triggered by the application date, not subsequent filings. Referring to previous court decisions, the Tribunal highlighted that interest liability arises automatically under Section 11BB. The Tribunal rejected the Department's argument that interest should be calculated from a later application date, affirming that the Department was liable to pay interest from the initial application date. Consequently, the order was set aside, and the appeal was allowed.

This detailed analysis of the judgment provides a comprehensive understanding of the issues discussed, the arguments presented by both parties, and the Tribunal's legal interpretation leading to the final decision.