2002 (9) TMI 214 - AT - Central Excise

Summary

Issues:
- Application for payment of interest on delayed refunds under Section 11BB
- Eligibility for interest on delayed refunds under Section 11B
- Interpretation of Modvat credit rules and payment of interest

Issue 1: Application for payment of interest on delayed refunds under Section 11BB
The applicant filed a Misc. application seeking interest on delayed refunds. The applicant argued that under Section 11BB, interest is payable if refunds are not given within three months of the refund application. The applicant cited Notification No. 24/2001, which clarified the rate of interest payable at 9% per annum. The delay in refunds was emphasized as a burden on exporters, warranting the payment of interest.

Issue 2: Eligibility for interest on delayed refunds under Section 11B
The Departmental Representative contended that interest cannot be paid on the refund amount as it was related to Modvat credit and not a direct refund of duty paid. The contention was based on the argument that Section 11AB's proviso exempts interest payment in cases where duty becomes payable due to Board instructions and is voluntarily paid without reserving the right to appeal. The Tribunal noted that the refund in question arose from non-utilization of Modvat credit, not falling under Section 11A of the Central Excise Act, thus excluding it from the provision of interest under Section 11AB.

Issue 3: Interpretation of Modvat credit rules and payment of interest
The Tribunal referenced the Supreme Court's decision in CCE, Jaipur v Raghuvar India Ltd., emphasizing that the refund related to Modvat credit rules framed under Section 37B, not Section 11A. The Tribunal concluded that since the refund was due to non-utilization of Modvat credit on inputs used in the final exported product, it did not fall under Section 11A and, therefore, was not subject to interest payment under Section 11AB. Consequently, the Tribunal rejected the Misc. application for interest on delayed refunds.

This judgment clarifies the distinction between refund claims under Section 11B and Modvat credit rules, highlighting the inapplicability of interest payment provisions in cases not falling under Section 11A of the Central Excise Act.