2021 (6) TMI 742 - AT - Central Excise

Interest on delayed refunds - jurisdiction of adjudicating authority to review / reopen the adjudication order already passed - HELD THAT - Both the authorities have failed to appreciate the reasoning given by the Tribunal while allowing the appeals of the appellant for refund of accumulated cenvat credit under Rule 5 with consequential relief - The Tribunal in GENERAL COMMODITIES PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE 2016 (7) TMI 653 - CESTAT BANGALORE allowed the appeal of the appellant and the Revenue s appeal before the High Court was also dismissed; hence the decision of the Tribunal attained finality. In spite of that, the appellant had to file again the refund application though the original authority vide its order dt. 25.09.2017 sanctioned the refund but did not grant interest in view of the consequential relief given by the Tribunal. Thereafter the appellant filed a separate application under Section 11BB of the Central Excise Act, 1944 for claiming the interest for the delay in granting the refund - But the Revenue did not take any action on the application of the appellant and the appellant had to approach the Tribunal for seeking direction to the original authority to dispose of the application and the Tribunal vide its order dt. 23.04.2019 directed the original authority to dispose of the application and thereafter the Revenue again issued a show-cause notice dt. 15.05.2019 to the appellant proposing to reject the demand for interest on the grounds that the original authority does not have the jurisdiction to review or reopen the adjudication order already passed and the appellant had the liberty to file appeal against such adjudication order but he had not filed the same and hence the original authority refused to grant the interest. The Board vide its circular No.670/61/2002-CX dt. 01.10.2002 has also allowed the payment of interest on delayed refund - Further, the entitlement to claim interest on delayed refund is already settled in favour of the assessee by the judgment of the Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT . The appellants are entitled for interest on delayed payment of refund - matter remanded back to the original authority with the direction to compute the interest in accordance with law - appeal allowed by way of remand.

Summary

Issues:
1. Grant of interest for delayed refunds.

Detailed Analysis:
The appeals were filed against three impugned orders rejecting appeals for interest on delayed refunds. The appellant, engaged in manufacturing, had unutilized cenvat credit and claimed a refund in 2009. Despite previous legal proceedings, the appellant reapplied for the refund, which was sanctioned without interest. The appellant then sought interest under Section 11BB of the Central Excise Act, 1944. The Revenue contended that no appeal was filed against a previous order, thus rejecting the interest claim. The appellant argued that interest under Section 11BB is separate from the refund claim process. Citing legal precedents and a circular, the appellant emphasized their entitlement to interest on delayed refunds.

The learned counsel for the appellant contended that the impugned orders lacked legal basis and violated principles of natural justice. They argued that the authorities failed to implement the Tribunal's order allowing the refund with consequential relief, including interest. The appellant's separate application for interest under Section 11BB was not a review of previous orders but a rightful claim. The counsel cited the Apex Court's decision in Ranbaxy Laboratories Ltd. case and a Board circular supporting the payment of interest on delayed refunds. Referring to a Tribunal decision, the counsel asserted the appellant's right to interest under Section 11BB.

After considering submissions, the Tribunal found that the authorities failed to appreciate the Tribunal's previous decision allowing the refund with consequential relief. The Tribunal highlighted that the appellant's application for interest under Section 11BB was legitimate and did not amount to a review of settled matters. Citing the Apex Court's judgment and a Board circular, the Tribunal ruled in favor of the appellant's entitlement to interest on delayed refunds. The Tribunal set aside the impugned orders, remanding the matter to the original authority to compute and grant interest within three months.

In conclusion, the Tribunal allowed all three appeals, emphasizing the appellant's right to interest on delayed refund payments, in line with legal precedents and circulars.