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2024 (7) TMI 300 - AT - Central Excise100% EOU - relevant date for computing interest on deposit of amounts made against an audit objection - from the date of payment under protest or as per provisions of Section 11BB, whereby the relevant date would be 3 months from the date of filing the refund application - appropriate rate of interest for a delayed refund - jurisdiction - Tribunal is competent to decide the effective rate of interest other than that notified under sec. 11BB, for a delayed refund under the Act or not. What is the relevant date for computing interest as per the facts of this case? - HELD THAT - This is a case where the duty has becomes refundable as a consequence of the judgment of an Appellate Authority. Explanation B to Clause (5) of Section 11B of the Act defines Relevant Date . Sub-clause (ec) thereof clarifies that where the duty becomes refundable as a consequence of a judgement decree order or direction of appellate authority Appellate Tribunal or any Court, the date of such judgement decree, order or direction shall be the relevant date. Explanation to section 11BB also states that where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the Court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section. Hence the relevant date for calculating the interest rate in terms of section 11BB would be three months from the date immediately after the expiry of three months from 23.08.2018, the date of the order of the Commissioner (Appeals). What is the appropriate rate of interest for a delayed refund, of an advance payment made towards an audit objection? - HELD THAT - It has been categorically held by the Hon ble Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT and discussed elaborately above, that notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or in any law for the time being in force, no refund shall be made except as provided in Section 11B of CEA 1944. The Hon ble Court went on to repeat that so long as Section 11B is constitutionally valid, it has to be followed and given effect to. The appellant would only be eligible for interest at the effective rate as per the notification issued under section 11BB of Central Excise Act, 1944 and not at any higher rate. Competence of the Tribunal to fix a higher rate of interest than prescribed under Section 11BB of the Central Excise Act, 1944 - Having come to a conclusion on both the issues raised by the appellant within the framework of sec. 11B and 11BB of the CEA 1944, it is not felt necessary to attempt an answer to the this question. The appellant is eligible for consequential relief - appeal disposed off.
Issues Involved:
1. Relevant date for computing interest on the refund. 2. Appropriate rate of interest for delayed refund. 3. Competence of the Tribunal to fix a higher rate of interest than prescribed under Section 11BB of the Central Excise Act, 1944. Issue-wise Detailed Analysis: 1. Relevant Date for Computing Interest: The appellant contended that the relevant date for computing interest should be from the date of deposit of amounts under protest (26-07-2016 and 25-08-2016). The Tribunal examined the facts and found that the refund claim was filed twice: initially on 11/01/2017 without proof of unjust enrichment (UJE) and later on 10/03/2021 with proof of UJE. The Tribunal held that the relevant date for computing interest should be three months from the date of the Order-in-Appeal (23.08.2018), as per Section 11B(5)(B)(ec) and the explanation to Section 11BB of the Central Excise Act, 1944. 2. Appropriate Rate of Interest for Delayed Refund: The appellant argued for an interest rate of 12% per annum, citing judicial precedents. However, the Tribunal emphasized that the rate of interest for delayed refunds is prescribed under Section 11BB of the Central Excise Act, 1944, and must be adhered to. The Tribunal referred to the judgment in Mafatlal Industries Ltd. (supra), which stated that no refund shall be made except as provided in Section 11B. The Tribunal concluded that the appellant is only eligible for interest at the rate prescribed by the relevant notification under Section 11BB of the Central Excise Act, 1944, and not at a higher rate. 3. Competence of the Tribunal to Fix a Higher Rate of Interest: The Tribunal did not explicitly address this issue, as the conclusions on the first two issues rendered it unnecessary. However, it was implied that the Tribunal, being a creature of statute, cannot legislate or fix a rate of interest higher than that prescribed under Section 11BB of the Central Excise Act, 1944. Conclusion: The Tribunal partially modified the impugned order and directed that: (a) The appellant is eligible for interest on the delayed payment of duty calculated from the date immediately after the expiry of three months from the date of the Order-in-Appeal (23.08.2018). (b) The interest rate applicable on the delayed refund would be as per the relevant notification issued under Section 11BB of the Central Excise Act, 1944. The appeal was disposed of accordingly, with the appellant eligible for consequential relief as per law.
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