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2019 (8) TMI 484 - AT - Central ExciseInterest on delayed refund - refund of pre-deposit - CBEC no. 670/61/2002-CX dated 01/10/2002 - section 11(B) of the Central Excise Act, 1944 - HELD THAT - Hon ble High Court in UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. 2006 (7) TMI 9 - KARNATAKA HIGH COURT has held that there is no provision for grant of refund in rule 5 under the present circumstance. The Hon ble High Court, however, allows the refund - The lower authorities have followed the ratio of this decision. Thus the present proceeding which follow the decision of Hon ble High Court also conclude with the same ratio as laid down by the Hon ble High Court of Karnataka. The refund is, therefore, not sanctioned under any express provision of law. In these circumstances, when the refund is not under any provisions of Central Excise Act, the provisions of the act relating to interest do not apply to the facts of the case. Appeal dismissed - decided against appellant.
Issues:
Denial of interest on a refund already sanctioned to the appellant. Analysis: The appellant filed a refund claim under Rule 5 of the Cenvat Credit Rules for refund of unutilized Cenvat Credit. The claim was rejected by the Dy. Commissioner, and subsequent appeals were made challenging the rejections under different provisions of the Central Excise Act. The Tribunal set aside the impugned order and allowed the appeal with consequential relief. The refund claim was sanctioned after directions from the Tribunal, but interest on the refund was not sanctioned by the Original Adjudicating Authority. The appellant argued for interest citing various legal precedents, including decisions of the Tribunal and the Hon'ble Apex Court. The Ld. AR contended that no interest should be granted as the amount was technically available in the appellant's account. The OIO relied on observations in the remand order of the Tribunal to deny the claim of interest, stating that there were no provisions for grant of refund of Cenvat Credit balance lying unutilized at the time of closure of the unit. The Hon'ble High Court of Karnataka in a similar case observed that Rule 5 does not apply when there is no manufacture due to the closure of the company. The High Court held that there is no bar under Rule 5 for granting a refund in such circumstances. The Tribunal's decision to order a refund was justified in light of the closure of the factory and the appellant coming out of the Modvat Scheme. The High Court held that there is no provision for a refund under Rule 5 in the present circumstance but allowed the refund, leading the lower authorities to follow the same ratio. As the refund was not sanctioned under any express provision of law, the provisions of the act relating to interest did not apply to the case, leading to the dismissal of the appeal. In conclusion, the Tribunal dismissed the appeal, relying on the High Court's decision and the absence of a specific provision for refund under Rule 5 in the given circumstances. The denial of interest on the sanctioned refund was upheld based on the lack of a legal basis for interest in the absence of an express provision under the Central Excise Act.
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