2022 (6) TMI 161 - AT - Central Excise

Entitlement of Interest on delayed refund - relevant date for calculation of time - appellant is seeking interest right from the date of duty deposited during investigation - whether appellant is entitled for interest only after three months from the date of application of refund? - HELD THAT - The fact is not in dispute that appellant has deposited certain amount during investigation. The appellant neither filed any claim nor refund application but because of demand which was dropped by learned Commissioner (Appeals) only thereafter they filed refund claim. The Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT held that interest on refund is payable only after three months from the date of application. Therefore, since the appellant s refund claim is sanctioned within three months no interest is accrued. As per Clause (ec) of Section 11B (2), the relevant date for filing refund application is one year from the date of order from which the refund arose. In the present case, refund arises only after passing of order-in-appeal by the Commissioner (Appeals) dropping the demand. Therefore, there is no occasion to give refund prior to the date of order-in-appeal. Considering that the refund was sanctioned within three months from the date of application and the refund arose consequent to order of Commissioner (Appeals), no interest is payable from the date of deposit of the duty during investigation. The appellant is not entitled for the interest on refund sanctioned from the date of deposit of duty - appeal dismissed - decided against appellant.

Summary

Issues:
- Entitlement to interest on refund claim from the date of duty deposited during investigation.

Analysis:
The case involved the appellant who had deposited a certain amount of duty during an investigation. Subsequently, the demand for duty was dropped by the Commissioner (Appeals), leading the appellant to file a refund claim. The Adjudicating Authority sanctioned the refund claim, but the appellant contested that interest was not granted. The Commissioner (Appeals) ruled that interest on the refund claim is only payable after three months from the date of the application, not from the date of duty deposit during the investigation.

The learned Superintendent representing the Revenue reiterated that interest on a refund claim is admissible only after three months from the filing of the refund application. Citing a precedent from the Hon’ble Supreme Court, the Superintendent argued that since the refund was sanctioned within three months from the application date, no interest is applicable in this case.

Upon careful consideration, the Member (Judicial) noted that the appellant had not filed any claim or refund application until the demand was dropped by the Commissioner (Appeals). Referring to the Supreme Court decision, it was established that interest on a refund is payable only after three months from the date of the application. The relevant date for filing a refund application is one year from the date of the order from which the refund arose. In this case, the refund arose only after the Commissioner (Appeals) dropped the demand, making it unnecessary to grant interest prior to the order-in-appeal. As the refund was sanctioned within three months from the application date and arose from the Commissioner's order, no interest is payable from the date of duty deposit during the investigation.

Consequently, the Member (Judicial) concluded that the appellant is not entitled to interest on the refund from the date of duty deposit. The impugned order was upheld, and the appeal was dismissed.