2019 (2) TMI 406 - AT - Central Excise

Interest on delayed refund - relevant date for calculation of refund - Held that - The wording of the Section 11BB is categorical and the interest it is payable after three months from the date of application of refund which in this case is 12.05.2008. The relevant date for filing a refund claim under Section 11B has no significance in determining the date for payment of interest under Section 11BB - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund claim of duty paid under Section 11B of the Central Excise Act.
2. Justification of interest payment on the refund amount.
3. Interpretation of Section 11BB regarding the relevant date for interest payment.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal regarding the classification of Crane Betel Nut Powder. The dispute was settled in favor of the respondent, leading to a refund claim under Section 11B of the Central Excise Act. The lower authority sanctioned the refund, crediting it to the Consumer Welfare Fund, stating that the duty burden was passed on to consumers. The First Appellate Authority approved the refund but denied interest to the respondents. The CESTAT, in its Final Order, directed the refund along with interest to be paid to the respondents, which was further confirmed by the Deputy Commissioner.

2. The Revenue challenged the interest payment timeline, arguing that interest should be paid from three months after the final CESTAT order, not the refund application date. The Hon'ble High Court dismissed the Revenue's appeal, and the Supreme Court upheld this decision. The First Appellate Authority also upheld the Deputy Commissioner's decision on interest payment. The Revenue's contention was based on the explanation to sub-section 2 of Section 11B regarding the relevant date for refund application.

3. The issue of interest payment under Section 11BB was crucial. The Hon'ble Apex Court's decision in the case of Ranbaxy Laboratories Ltd. clarified that interest commences from three months after the refund application date, not from the order date. The Tribunal noted that the wording of Section 11BB clearly specifies the interest payment timeline. Relying on the precedent set by the Apex Court, the Tribunal affirmed the correctness of the Deputy Commissioner's decision to sanction the refund with interest from the application date.

In conclusion, the Tribunal rejected the Revenue's appeal, upholding the interest payment decision made by the Deputy Commissioner and affirmed by the First Appellate Authority. The Tribunal's decision was based on the clear interpretation of Section 11BB and the precedent set by the Hon'ble Apex Court, ensuring the correct application of interest payment rules in refund cases.