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2019 (3) TMI 1096 - HC - Central ExciseInterest on delayed refunds - time period for calculation of interest - section 11BB of the Central excise Act - Held that - The High Court of Gujarat in the case of Commissioner, Central Excise vs Reliance Industries Limited 2010 (10) TMI 190 - GUJARAT HIGH COURT , while considering a similar canvas against the payment of interest on delayed refunds under Section 11BB of the Central Excise Act, in terms of the obligation to refund under Rule 5 of the CENVET Credit Rules Notification dated 18.6.2012, did not accept the canvas on behalf of the revenue that the scheme for refund of unutilized CENVAT Credit is a special beneficial scheme with self contained procedure providing for the manner and method of its implementation, and hence any refund claimed under the Rules would be governed only by the provisions of the Scheme and the general provisions of Section 11BB of the Central Excise Act cannot be resorted to - the High Court of Gujarath held that when there is delay in sanctioning the refund under Rule 5 of the CENVAT Credit Rules Notification dated 18.6.2012, the provisions of Section 11BB of the Central Excise Act would be clearly attracted. The learned counsel for the appellant revenue is unable to persuade this court to hold that the obligation to refund unutilized CEVANT Credit under Rule 5 of the CENVAT Credit Rules Notification dated 18.6.2012 is distinct and separate from the obligation under Section 11B of the Act. This Court concurs with the reasons assigned in the aforesaid decisions to hold that the revenue would be obliged to pay under interest for the delayed refund as contemplated under Section 11BB of the Act even for the delayed refund of the Unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules Notification dated 18.6.2012. This court is of the considered opinion that no substantial questions arise for consideration - appeal dismissed.
Issues:
1. Eligibility of interest under Section 11BB of the Central Excise Act for delayed refund of unutilized CENVAT credit. 2. Interpretation of provisions regarding refund of unutilized CENVAT credit under CENVAT Credit Rules & Notification dated 18.6.2012. 3. Applicability of interest for delayed refund in the context of unutilized CENVAT credit compared to excess duty paid or collected. Analysis: Issue 1: Eligibility of interest under Section 11BB of the Central Excise Act for delayed refund of unutilized CENVAT credit: The appellant-revenue challenged the decision of the Appellate Tribunal, which allowed the respondent's appeal for interest on delayed refund of unutilized CENVAT credit. The appellant argued that Section 11BB applies only to excess duty paid or collected, not to unutilized credit. However, the Tribunal set aside the Commissioner's order, citing precedents. The High Court of Gujarat and Madras held that interest under Section 11BB is applicable to delayed refunds of unutilized credit, rejecting the revenue's argument. The Court concurred with this view, emphasizing the obligation to pay interest under Section 11BB even for unutilized credit refunds. Issue 2: Interpretation of provisions regarding refund of unutilized CENVAT credit under CENVAT Credit Rules & Notification dated 18.6.2012: The respondent claimed refunds for unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules & Notification dated 18.6.2012. The Assistant Commissioner allowed the refunds but denied interest for the delay. The Commissioner upheld this decision, stating that interest under Section 11BB doesn't apply to unutilized credit refunds. However, the Tribunal overturned this, relying on precedents and emphasizing the applicability of Section 11BB to such refunds. Issue 3: Applicability of interest for delayed refund in the context of unutilized CENVAT credit compared to excess duty paid or collected: The appellant-revenue argued that unutilized credit refunds differ from excess duty refunds, hence Section 11BB doesn't apply to the former. They claimed that the credit remaining in the assessee's account distinguishes unutilized credit from excess duty. However, the Tribunal and High Courts of Gujarat and Madras disagreed, stating that the obligation to pay interest under Section 11BB extends to delayed refunds of unutilized credit. The Court upheld this view, emphasizing the statutory obligation for interest on delayed refunds. In conclusion, the High Court dismissed the appeals, affirming the obligation to pay interest under Section 11BB for delayed refunds of unutilized CENVAT credit, in line with precedents and statutory provisions. The Court found no substantial questions for consideration, leading to the dismissal of the appeals and the corresponding application.
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