2021 (10) TMI 847 - AT - Central Excise

Delay in sanction of interest on interest - Applicability of time limitation - whether the delay in sanction of interest on interest beyond the three months, comes within the purview of section 11BB? - HELD THAT - It is apparent that the issue has been decided by Hon ble High Court of Gujarat in favour of the assessee. The issue is no more res integra and stand settled by the Apex Court in the case of Ranbaxy Laboratories Ltd. 2011 (10) TMI 16 - SUPREME COURT . Perusal of the decision makes it abundantly clear that what is payable under section 11AB is the interest on the expiry of period of three months from the date of receipt of application for the refund the amount which is still not refunded. The sanction of refund of interest on the interest amount has been allowed for this decision only for the reason that the demand has caused unnecessary delay even while sanctioning the claim of refund of duty. There is no delay of sanction of refund of ₹ 37,75,854/- as was paid under Rule 18A as discussed above, the said claim of ₹ 66,01,485/-. was sanctioned within the period of 3 months as is required under section 11B. The interest thereupon has already been sanctioned as is required under section 11BB - there are no infirmity with the findings of the Commissioner (Appeals) - appeal dismissed.

Summary

Issues Involved:
1. Refund claim of Central Excise duty paid on raw material used in the manufacture of finished goods and exported under Rule 18 of Central Excise Rules, 2002.
2. Rejection of refund for rebate of duty paid on inputs.
3. Claim for interest on the refund amount.
4. Rejection of claim for interest on the interest amount already sanctioned.

Analysis:

Issue 1: Refund claim of Central Excise duty paid on raw material used in the manufacture of finished goods and exported under Rule 18 of Central Excise Rules, 2002.
The appellant filed a refund claim for Central Excise duty paid on raw materials used in the manufacture of finished goods and exported under Rule 18 of Central Excise Rules, 2002. Various Orders-in-Original partly allowed the claims, but the refund for rebate of duty paid on the inputs was disallowed. Subsequent appeals and refund claims were made, leading to the present appeal before the Tribunal.

Issue 2: Rejection of refund for rebate of duty paid on inputs.
The initial refund claims were partly allowed, but the rebate of duty paid on the inputs was disallowed. This decision was upheld through subsequent appeals, leading to the appellant approaching the Tribunal for redressal.

Issue 3: Claim for interest on the refund amount.
The appellant sought interest on the refund amount of Central Excise duty sanctioned by the High Court of Rajasthan. The interest was initially not sanctioned, leading to a subsequent application for interest. The appellant argued that the interest should be granted as per the provisions of the Central Excise Act, 1944. The Department contended that interest had already been paid on the principal refund amount and that no further interest was due.

Issue 4: Rejection of claim for interest on the interest amount already sanctioned.
The appellant further claimed interest on the interest amount that was sanctioned after a delay of 20 months. The Department argued that interest on the interest amount was not payable and fell outside the scope of section 11BB of the Central Excise Act, 1944. The appellant cited a decision of the Hon'ble High Court of Gujarat in support of their claim for interest on the interest amount.

In the final analysis, the Tribunal observed that the interest for the initial refund amount had already been sanctioned within the required time frame. The issue of interest on the interest amount was considered in light of legal precedents and statutory provisions. The Tribunal held that there was no delay in sanctioning the refund amount and interest, and the claim for interest on the interest amount was not justified. The decision of the Commissioner (Appeals) was upheld, and the appeal was dismissed.