2021 (11) TMI 300 - AT - Central Excise

Interest on refund - claim of interest from the date of pre-deposit made against stay order - HELD THAT - The only interpretation of section 11BB can be that interest under the said section becomes payable only on expiry of a period of three months from the date of receipt of application under sub section (1) of section 11B of the Act. Perusal to section 11B makes it clear that application for claiming the refund of any duty or interest it made before the expiry of one year from the relevant date, proviso thereof makes it clear that the said period of limitation shall not apply in case the duty has been paid under protest. Relevant date is defined under section 11B oc CEA, 1944 and Rule 5 (B) of Central Excise Rules itself. Sub clause (e) and (c) are applicable in the present case for the purpose of relevant date for the sole reason that the duty was paid consequent to the order of Tribunal. The refund claim was sanctioned within three months from the date of application filed by the appellant for the said claim. - There is no delay in grant of refund consequently, no question arises for grant of interest. The question of interest from the date of deposit does not at all arises also for the reason that there is no apparent protest of the appellant while depositing the amount in question which otherwise was deposited pursuant to the said order of this Tribunal.

Summary

Issues:
Claim for interest on refund amount under section 11BB of Central Excise Act, 1944.

Analysis:
The case involved a dispute regarding the entitlement of the appellant for interest on a refunded amount of ?16,82,912. The appellant, engaged in the manufacture of yarn, had initially faced demands during provisional assessment, which were confirmed in subsequent orders. The matter had been remanded multiple times for fresh adjudication. Upon the final remand, the appellant filed a claim for a refund of the confirmed amount, which was initially sanctioned without interest. The appellant challenged the denial of interest before the Tribunal.

The appellant's counsel argued that interest on the refund amount should be granted from the date of deposit until the refund, citing precedents where interest had been allowed in similar cases. The Departmental Representative, however, relied on legal decisions emphasizing that interest is a form of compensation and not a matter of right, particularly referring to judgments of the Apex Court.

The Tribunal analyzed the provisions of section 11BB of the Central Excise Act, 1944, which governs the right to claim interest on refunds. It was noted that interest becomes payable only after three months from the date of the refund application under section 11B. The Tribunal further examined the timeline of events, including the filing of the refund claim and its subsequent sanction within three months, concluding that there was no delay on the part of the Department in granting the refund.

The Tribunal distinguished the appellant's case from the cited precedents where interest had been allowed due to significant delays in refund processing. In this instance, as the refund was sanctioned promptly within the prescribed period, the Tribunal held that there was no justification for granting interest. The Tribunal upheld the order denying interest on the refunded amount, stating that the provisions of section 11BB were not triggered due to the timely refund sanction. Consequently, the appeal for interest was dismissed, and the order under challenge was upheld.