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2024 (12) TMI 752 - AT - CustomsInterest on sanctioned refund - relevant date for calculation of interest - whether the appellant is eligible for interest on the sanctioned refund after three months from the date of application or after the date of order of Commissioner (Appeals) remanding the matter to the adjudicating authority for reconsideration of the issue of refund? - HELD THAT - The Learned Commissioner (Appeals) has denied the grant of interest only on the basis of explanation appended to Section 27A. In this regard it is found that the said explanation is not applicable in the present case for the reason that the refund sanction order was passed by the Deputy Commissioner of Customs. Therefore, as per Section 27A, the appellant is entitled for the interest on the sanctioned refund after three months from the date of application. This issue has been considered time and again particularly by the Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT where it was held that ' the 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.' The appellant is rightly entitled for the grant of interest on the sanctioned refund from the date, after three months from the date of application, till the date of sanction of refund - the impugned order is set aside - Appeal allowed.
Issues Involved:
1. Eligibility for interest on sanctioned refund. 2. Commencement date for interest calculation on delayed refunds. Detailed Analysis: 1. Eligibility for Interest on Sanctioned Refund: The primary issue in this appeal is whether the appellant is entitled to interest on the sanctioned refund. The appellant's claim for a refund was initially denied by the adjudicating authority but was later sanctioned and credited to the Consumer Welfare Fund. Upon appeal, the Commissioner (Appeals) remanded the case to the adjudicating authority, which then sanctioned the refund, acknowledging there was no unjust enrichment. The appellant argues that interest should be granted from three months after the date of the refund application until the refund is sanctioned, relying on several legal precedents, including the Supreme Court's decision in Ranbaxy Laboratories Ltd. v. Union of India. 2. Commencement Date for Interest Calculation on Delayed Refunds: The core legal question is determining the commencement date for calculating interest on delayed refunds. The appellant contends that interest should accrue from three months after the refund application date, as per Section 27A of the Customs Act. The Commissioner (Appeals) had denied interest based on an explanation appended to Section 27A, which the appellant argues is not applicable since the refund order was passed by the Deputy Commissioner of Customs. The tribunal examined the legal precedents, particularly the Supreme Court's interpretation in Ranbaxy Laboratories Ltd., which clarified that interest under Section 11BB of the Central Excise Act becomes payable if the refund is not granted within three months from the date of the refund application. The tribunal emphasized that the explanation to Section 11BB does not alter the commencement date for interest calculation, which remains three months post-application receipt. The tribunal also referenced several other judgments and circulars from the Central Board of Excise & Customs, which consistently interpret Section 11BB as mandating interest payment starting three months after the refund application date. The tribunal concluded that the appellant is entitled to interest from the date three months after the refund application was filed until the refund is sanctioned. Conclusion: Based on the established legal position and the tribunal's analysis, the appellant is entitled to interest on the sanctioned refund from three months after the application date until the refund is sanctioned. Consequently, the tribunal set aside the impugned order and allowed the appeal, affirming the appellant's right to interest as claimed.
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