2020 (3) TMI 653 - AT - Central Excise

Interest on delayed refund - relevant time for claiming refund - proviso as introduced under Section 11BB of Central Excise Act, 1944 - HELD THAT - The issue has been clarified by Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT . In the said case, Hon ble Apex Court has examined the issue in detail and also examined the C.B.E. C. Circular dated 1-10-2002 and held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. In the present case, the refund claims were filed during the period 7-3-1993 to 28-4-1994. Section 11BB was introduced with effect from 26-8-1995. It is apparent that 3 months have passed from the date of filing refund claim and introduction of Section 11BB - there is a merit in the claim of the appellant that they are entitled for interest with effect from 26-8-1995 onwards till sanction of refund - appeal allowed.

Summary

Issues:
Appeal against denial of interest pre-Section 35FF.

Analysis:
The appellants filed appeals against the denial of interest before the introduction of Section 35FF. The appellants had availed refund schemes on specific dates ranging from 1987 to 1992. They were granted interest from 10-5-2008, the date of Section 35FF introduction. The counsel argued for entitlement to interest from 3 months after filing the refund or at least from 26-8-1995 when the proviso was added to Section 11BB of the Central Excise Act, 1944. The counsel cited cases like Union of India v. Shreeji Colour Chem Inds. and Ranbaxy Laboratories Ltd., along with Circular No. 670/61/2002-CX, to support the argument.

The Assistant Commissioner relied on the impugned order, while the Member (T) considered the rival submissions. The issue was clarified by the Hon'ble Apex Court in the case of Ranbaxy Laboratories Ltd. The court examined the issue in detail and referred to a Circular dated 1-10-2002. The court observed that the liability to pay interest under Section 11BB commences from the expiry of three months from the date of the refund claim application under Section 11B(1) and not from the order of refund. As the refund claims were filed between 7-3-1993 to 28-4-1994, and Section 11BB was introduced on 26-8-1995, the appellants were entitled to interest from 26-8-1995 until the sanction of the refund.

The appeals were allowed in favor of the appellants, granting them interest from 26-8-1995 onwards until the refund sanction date. The judgment was pronounced in open court on 4-9-2019.