2022 (8) TMI 491 - AT - Central Excise

Lesser sanction of refund claim and non-payment of interest - quantum of refund reduced - amendment to N/N. 20/2007 by N/N. 20/2008 and 38/2008 - HELD THAT - The department was required to sanction the amount as claimed in the original refund application, which was rejected by the original authority, but the Appeal of the Appellant was ultimately allowed by the Tribunal. The department is directed to refund the amount, as claimed in the original refund application filed by the respective Appellants. As regards interest, It is found that it is not the case here that the Appellants sought refund and/or filed refund applications after passing of the Tribunal s order since originally the refund claim itself was under challenge before the refund sanctioning authority. The Appellants are entitled to interest after 3(three) months from the date of filing of the original refund claim till the sanction of the refund amount - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to lesser sanction of refund claim and non-payment of interest by original and appellate authority.

Analysis:
The appeals were filed challenging the lesser sanction of refund claim and non-payment of interest by the original and appellate authorities. The manufacturing units of the appellants in Tripura were entitled to claim exemption under Notification No.20/2007-CE. An amendment to this notification in 2008 affected the refund amounts. Initially, the original authority rejected the refund claim as time-barred, following a Tribunal decision. However, a subsequent High Court decision set aside the Tribunal's ruling, leading the Tribunal to allow the appeals.

The appellants sought implementation of the Tribunal's order, but delays ensued. A Supreme Court judgment upheld the amendment reducing the refund claim amount. Subsequently, the original authority sanctioned the refund on a proportionate basis, which was also upheld by the appellate authority. The appellants contested the part rejection of the refund claim and non-sanction of interest, arguing that the full amount paid from PLA should be refunded if it was less than the determined amount.

The counsel referred to a Supreme Court judgment emphasizing that pending refund applications should be decided as per amended notifications. The appellants argued that since their refund application was not pending, the department should have refunded the full amount based on the Tribunal's decision. Regarding interest, it was contended that as the refund application was initially rejected, interest should be paid from three months after the filing of the refund claim until its sanction.

The Tribunal held that the department should have sanctioned the full amount as per the original refund application, as the Tribunal had ultimately allowed the appeals. It was also determined that the appellants were entitled to interest from three months after the filing of the original refund claim until the refund amount was sanctioned. Consequently, all four appeals were allowed with consequential relief.

In conclusion, the Tribunal's decision addressed the challenges to the lesser sanction of refund claim and non-payment of interest, emphasizing the entitlement of the appellants to the full refund amount and interest as per the legal precedents cited.