2019 (5) TMI 208 - AT - Central Excise

Interest on delayed refunds - relevant date for calculation of interest - Section 11BB in the Central Excise Act, 1944 - HELD THAT - A plain reading of the section shows that date for reckoning the interest is the date of application in case of applications filed post Finance Act, 1995 and three months from the date of presidential assent to this Act for refund applications filed prior to Finance Act, 1995 - In this case, the application was filed in 1992 and therefore with effect from 25.08.1995 interest has to be paid. The appellant shall be paid interest from 25.08.1995 upto the date on which he has been paid the refund - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim denial of interest under section 11BB.

Analysis:
1. The appellant filed a refund claim in 1992, which was partly allowed but later credited to the Consumer Welfare Fund in 2003. After multiple rounds of litigation, CESTAT finally ruled in favor of the assessee in 2016, stating unjust enrichment does not apply.
2. The issue in contention was the denial of interest under section 11BB by the lower authorities, claiming that since the refund was paid within three months of the final CESTAT order in 2016, interest was not payable. The appellant argued that interest should be calculated from the date of the refund application in 1992.
3. The appellant cited the Supreme Court's ruling in Ranbaxy Laboratories Ltd., stating that interest must be paid if a refund is not sanctioned within three months of the refund application. Additionally, the appellant referred to a similar case decided by CESTAT and upheld by the High Court, emphasizing that interest should be calculated from the date of application.
4. The Tribunal analyzed Section 11BB of the Central Excise Act, which mandates interest payment if a duty refund is not processed within three months of the application. The Tribunal concluded that in this case, interest should have been paid from 25.08.1995 onwards, as the application was filed in 1992. This decision was consistent with the precedent set in a similar case upheld by the High Court.
5. Consequently, the impugned order denying interest was set aside, and the appeal was allowed, granting the appellant interest from 25.08.1995 until the date of the refund payment.