2022 (4) TMI 474 - AT - Central Excise

Grant of interest in respect of the refund claim already granted - interest rejected on the ground that since, the refund claim was granted within 3 months from the date of the Commissioner (Appeals) order, no interest is payable - Section 11BB of Central Excise Act - HELD THAT - There is no dispute in the fact that the appellant had filed a refund claim on 11.06.2018 which was though rejected by the original authority but allowed by the Commissioner (Appeals) - From the plain reading of Section 11BB, it is clear that under any circumstances the refund should be disposed of within a period of three months and if there is delay after three months from the date of filing application, the assessee shall be entitled for interest from the date after three months up till the date of sanction of refund. Reliance placed in the case of UNION OF INDIA OTHERS VERSUS M/S HAMDARD (WAQF) LABORATORIES 2016 (3) TMI 68 - SUPREME COURT where it was held that the principle laid down in Ranbaxy Laboratories Limited (2011 (10) TMI 16 - Supreme Court of India ) wherein held 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 would apply on all fours to the case at hand. Thus, if there is any delay in sanction of the refund claim from the date of filing application, the appellant is entitled for the interest from the date of filing of refund claim till the date of sanction. Revenue s contention is that they have granted the refund within three months form the date of Commissioner (Appeals) order - it can be concluded that once the Commissioner (Appeals) has allowed the refund, the appellant was entitled for the refund right from the date of filing of the application. Therefore, for the purpose of interest, it is not the date of Commissioner (Appeals) order, but it is the date of filing of refund application needs to be taken. The appellant is entitled for the interest on the refund - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Entitlement to interest on a refund claim already granted.

Analysis:
The case revolves around the question of whether the appellant is entitled to interest on a refund claim already granted. The appellant initially claimed remission of duty for destroyed goods, leading to the reversal of Cenvat Credit. Subsequently, they filed a refund claim, which was initially rejected but later allowed by the Commissioner (Appeals). The appellant sought interest on the refund, citing Section 11BB, which mandates interest on delayed refunds after three months from the date of the refund application. The appellant contended that they are entitled to interest based on various judgments, including those of Ranbaxy Laboratories Ltd., Humdard (Waqf) Laboratories, and others.

The appellant's argument was supported by the interpretation of Section 11BB, which clearly states that interest becomes payable if the refund is not processed within three months of the application. The appellant relied on the Supreme Court's decisions in cases like Ranbaxy Laboratories Ltd., which emphasized that interest becomes payable after three months from the date of the refund application. The Court clarified that the date of the Commissioner (Appeals) order is not relevant for calculating interest; rather, it is the date of the refund application that matters.

In contrast, the Revenue contended that they granted the refund within three months of the Commissioner (Appeals) order. However, the Tribunal held that once the Commissioner (Appeals) allowed the refund, the appellant was entitled to it from the date of the refund application. Therefore, the Tribunal concluded that the appellant is indeed entitled to interest on the refund claim. Consequently, the impugned order was set aside, and the appeal was allowed, granting the appellant consequential relief.

In conclusion, the Tribunal's decision clarified the entitlement to interest on a refund claim already granted, emphasizing the importance of the date of the refund application for calculating interest under Section 11BB. The judgment provides a comprehensive analysis of the legal provisions and precedents governing the payment of interest on delayed refunds, ensuring a fair outcome for the appellant in this case.