2021 (3) TMI 790 - AT - Central Excise

Interest on delayed refund (already sanctioned) - rate of interest on refund - HELD THAT - The Hon ble Jurisdictional Punjab Haryana High Court in the case of LSE Securities Ltd. 2015 (8) TMI 687 - PUNJAB AND HARYANA HIGH COURT directed the department to pay interest @ 15% per annum from the date became due after excluding 3 months from the date of passing of order - Further, in the case of Shreewood Products Pvt.Ltd.- 2016 (10) TMI 273 - PUNJAB AND HARYANA HIGH COURT ), again the Hon ble Jurisdictional High Court has held that the appellant is entitled to payment of interest @ 12% per annum in terms of section 11BB of Central Excise Act, 1944 after 3 months after passing of the order of this Tribunal till the refund was granted. The appellant is entitled to refund @ 12% per annum after 3 months from the date of passing of the order of this Tribunal i.e.19.12.2019 till the refund is granted - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Rate of interest on delayed refund sanctioned to the appellant.

Analysis:
The appellant, a manufacturer of excisable goods, was issued a show cause notice demanding excise duty, interest, and penalty. The Tribunal allowed the appeal and dropped the demand, leading the appellant to file a refund claim of &8377; 25,00,000/- along with interest. The adjudicating authority sanctioned the refund claim with interest @ 6% as per CBEC's Circular. However, the appellant sought interest @ 12% per annum. The main issue was to determine the appropriate rate of interest on the delayed refund.

The appellant relied on various legal precedents to support their contention for interest @ 12% per annum, including decisions of the Hon'ble Apex Court and the Hon'ble Jurisdictional High Court. On the other hand, the authorized representative opposed the contention, citing a decision in another case and emphasizing that the government, as the creator of law, should not exceed the provisions of the statute. The Tribunal was tasked with reconciling these arguments to reach a decision.

The Tribunal referred to the decisions of the Hon'ble Jurisdictional High Court, which directed payment of interest at different rates in similar cases. In the case of LSE Securities Ltd., interest @ 15% per annum was directed, while in the case of Shreewood Products Pvt. Ltd., interest @ 12% per annum was deemed appropriate. The Tribunal held that these decisions were binding and concluded that the appellant was entitled to interest @ 12% per annum after 3 months from the date of passing the order of the Tribunal until the refund was granted. As a result, the appeal was disposed of in favor of the appellant.

This judgment clarifies the applicable rate of interest on delayed refunds in excise duty cases, providing a clear precedent based on the decisions of the Hon'ble Jurisdictional High Court. The Tribunal's decision ensures consistency and adherence to established legal principles in determining the rate of interest in such matters.