2019 (11) TMI 670 - AT - Central Excise

Interest on delayed refund - Section 11BB of the Central Excise Act - relevant time for calculation of interest - HELD THAT - In the impugned order, no reasons have been given for not granting interest on the delayed refund. Further, it is found that admittedly, there is a delay in disbursal of the refund amount in the present case. Further, notwithstanding the fact that the sanctioned refund is merely belatedly paid but instead, first adjusted against some other demand and then later on disbursed to the assessee. Further, even the Board has clarified vide various circulars that the interest becomes payable after the expiry of a period of three months from the date of receipt of the application under sub-section 1 of Section 11BB of the Act. The original authority is directed to quantify the interest for the period after the expiry of 3 months from the date of filing the refund application till the amount is paid - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund of excise duty without interest.

Analysis:
The appeal was against an order by the Commissioner(Appeals) granting a refund but denying interest on the same. The appellant, engaged in the production and supply of gases, underwent a change in shareholding and was renamed. Initially held liable for excise duty, penalties, and interest, the appellant appealed to the Tribunal. The Tribunal directed the appellant to deposit sums under protest, later allowing the appeals and setting aside the demands. Subsequent refund applications were sanctioned, but the amounts were adjusted against other demands. The Commissioner(Appeals) ordered the disbursal of the refunds without interest, leading to the present appeal.

The appellant argued that interest under Section 11BB of the Central Excise Act is mandatory after 3 months from the refund application. Citing legal precedents and CBIC circulars, the appellant contended that interest must be paid automatically if refunds are delayed. The appellant referenced cases where interest was awarded despite adjustments against other demands. The respondent argued that interest should be paid from the Tribunal's decision date, relying on a different Tribunal case.

The Tribunal found the impugned order lacked reasons for denying interest on delayed refunds. Citing the Apex Court's ruling in Ranbaxy Laboratories Ltd., the Tribunal held that interest becomes payable after 3 months from the refund application. Referring to circulars and legal precedents, the Tribunal emphasized the mandatory nature of interest payment. Noting the Karnataka High Court's decision in Vijai Industries, the Tribunal set aside the Commissioner(Appeals) order, directing the quantification of interest from the expiry of the 3-month period till payment.

In conclusion, the Tribunal allowed the appeal, finding the impugned order unsustainable in law. By following legal precedents and court decisions, the Tribunal directed the original authority to calculate interest from the specified period till payment, disposing of the appeal in favor of the appellant.