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2020 (2) TMI 752 - AT - Central ExciseInterest on delayed refund - area based exemption - section 11BB of CEA - Board s Circular 682/73/2002-CX dated 19.12.2002, as amended vide 842/19/2006-CX dated 08.12.2006 - It is the case of the Revenue that in view of the explicit instruction of the CBIC that the refunds under exemption Notification are different from the Refunds under Section 11B, interest under Section 11BB is not payable. HELD THAT - The circular No. 842/19/2006-CX dt. 08/12/2006, indeed clarifies that no interest under Section 11BB is payable on any refund arising out of Area Based Exemption Notification. However, we find that the Hon ble High Court of Gauhati in the case of AMALGAMATED PLANTATIONS (P) LTD. VERSUS UNION OF INDIA 2013 (11) TMI 589 - GAUHATI HIGH COURT has held that there was no distinction between refund under Area Based Exemption Notification and other refunds under Section 11B and interest under 11BB is payable on such refunds. The settled legal position as on today is that interest is payable under Section 11BB in respect of refunds sanctioned as per Area Based Exemption Notification - the impugned Order has correctly sanctioned interest on the refunds and there is no infirmity in the same - Appeal dismissed - decided against Revenue.
Issues:
1. Interpretation of Section 11BB regarding the payment of interest on refunds under Area Based Exemption Notification. 2. Validity of interest sanctioned by the First Appellate Authority on the refund of duty paid under Section 11BB. 3. Applicability of CBIC Circulars in determining the payment of interest on refunds. Analysis: 1. The case involved a dispute over the payment of interest under Section 11BB of the Central Excise Act, 1944, for refunds granted under an Area Based Exemption Notification. The Revenue contended that interest was not payable on such refunds as clarified by CBIC Circulars. However, the First Appellate Authority had sanctioned interest on the refund. The key argument was whether the provisions of Section 11B applied to refunds under the exemption notification. 2. The First Appellate Authority had allowed the appeal of the assessee, granting the refund of duty paid along with interest under Section 11BB. The Revenue challenged this decision, arguing that interest under Section 11BB was only applicable to refunds of excess duty under Section 11B, not to refunds under exemption notifications. The Revenue relied on CBIC Circulars to support their position. 3. The Tribunal referred to a judgment by the Hon'ble High Court of Gauhati in the case of Amalgamated Plantations (P) Ltd., which held that interest under Section 11BB is payable on refunds under Area Based Exemption Notifications. The Tribunal noted that this judgment was not overturned by the Supreme Court and was followed in subsequent cases. Therefore, the Tribunal upheld the decision of the First Appellate Authority, ruling that interest is payable on refunds granted under the exemption notification. In conclusion, the Tribunal held that interest under Section 11BB is payable on refunds sanctioned under Area Based Exemption Notifications, as per the settled legal position established by the judgments of the Hon'ble High Court of Gauhati. The impugned Order granting interest on the refunds was upheld, and the appeal filed by the Revenue was rejected.
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