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TMI Blog2023 (10) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... enue which is based on sub clause (ec) of clause (B) of Sub Section (5) of the Section 11B of the Central Excise Act, 1944 shall apply only in a case where there is a demand case where initially the demand is confirmed by the lower Authority, and when the same is set aside by the Tribunal /High Court /Supreme Court then only refund arises. In such case only, after setting aside the demand the refund arises out of such order by which demand was set aside and in that case only the interest is payable from the three months after the date of order of Tribunal/High Court/Supreme Court as the case may be. However, the contention of the revenue does not apply in a case where there is no demand but the case is of refund of suo-moto payment of service tax - Accordingly, the appellant is legally entitled for the interest after three months from the date of application for refund made first time. This issue has been considered in various judgments particularly in the Apex Court judgment of Ranbaxy Laboratories Ltd. [ 2011 (10) TMI 16 - SUPREME COURT ], wherein it was held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant did not collect the Service Tax from the firm. However, the above Service Tax was paid under the mistaken belief that the Appellant and the Firm are distinct persons and the Appellants are rendering Business Auxiliary Services . The Appellants were advised by their legal consultants that it cannot be said that being a partner of the firm the Appellant rendered any service to the firm and any remuneration received by them cannot be considered as payment received for any service provided to the firm. 1.2 The Appellant had also entered into a Trade Mark License Agreement with the Firm, in terms of which, the Appellant own the rights in the trademarks in respect of goods set out as Annexure in the Agreement. The Firm desired to obtain a license from the Appellant to use the licensed trademarks in respect of the products in connection with the Firms business in India. In consideration of such right, the Firm shall pay to the Appellant a royalty in form of annual trademark licensing fees. The Appellant paid service tax on the amount of royalty received from the Firm under a bona-fide belief that the activity is classifiable under the category-Intellectual Property Service. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Service Tax paid by them in view of the Final Order dated 27.04.2021 passed by the CESTAT. On 30.05.2022, the Appellant received a letter for personal hearing in respect of refund arising out of Order of the Tribunal dated 27.04 2021. 1.6 The Learned Assistant Commissioner, CGST, Division-VII, Ahmedabad South, vide Orders-in-Original dated 29.11.2022 and 13.12.2022 sanctioned the refund claims under Section 11B of the Central Excise Act, 1944. In the given Orders-in-Original, Ld. Assistant Commissioner observed that the Appellant are eligible for interest under Section 11BB of Central Excise Act, 1944 after three months from filing of the Applications for refund i.e., 05.04.2022, which is when the Application dated 04.04.2022 filed by the Appellant was received by the office of Ld. Commissioner. 1.7 The Appellant submitted a letter on 06.01.2023 to the Ld. Assistant Commissioner stating that the interest has been calculated from the date when intimation was made to the Authority regarding the favorable Final Order passed by the Tribunal. However, in terms of Section 11BB of the Central Excise Act, 1944 the Appellant are entitled to interest from the expiry of three months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd application i.e. 11.01.2011 and not from 27.07.2021 i.e., three months from the date of favorable Final Order passed by this Tribunal. Despite the detailed submissions by the Appellants, the Impugned Orders proceed on the premise that interest on the delayed refund should be granted after three months from the date of Final Order passed by this Tribunal. Therefore, the interest on delayed refund should be calculated from the expiry of three months from the date of application i.e., 11.01.2011. 2.3 He submits that the Impugned Orders refer to the definition of relevant date under Explanation (B)(ec) to Section 11B of the Central Excise Act, 1994 for determining the date of receipt of application of refund under Section 11BB of the Central Excise Act, 1944. The Appellant submit that the reliance placed on the said provision by the Ld. Appellate Authority is misplaced for the reason that the said sub-clause is applicable to the cases where refund claim is required to be filed for the first time on account of duty becoming refundable as a consequence of judgment, decree, order or direction of appellate authority, appellate tribunal or any court. The said provision is not applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is related to the refund claimed in respect of the service tax self-assessed and paid. Additionally, the Ld. Appellate Authority is also incorrect in their reasoning that the cases relied upon by the Appellant did not involve any issue of taxability and refund consequent to the determination of taxability. 2.9 He further submits that the case of Ranbaxy Laboratories (supra) is applicable in the present case. The given case though the case before the Hon ble Supreme Court was about delay sanction of the rebate, the ratio of the case discusses the interpretation and application of the Section 11BB of the Central Excise Act, 1944. In view of the above submissions and settled position of law, the Impugned Order has erred in its reasoning that the judgement in case of Ranbaxy Laboratories Ltd. vs. UOI 2011 (273) ELT 3(SC) and other cases relied upon by the Appellant are not applicable on the ground that the present case is distinct from those cases cited. 2.10 Without prejudice to the above submissions, he submits that the appellant is entitled for interest on the refund of service tax not only from three months after filing the refund application but also from the date of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sanctioned the refund. Now the issue before us is as to from which date the appellant is entitled for interest on the refund already sanctioned. The provision for grant of interest on refund is provided under section 11BB of the Central Excise Act, 1944, which is applicable in the matter of Service Tax by virtue of Section 83 of Finance Act, 1994. The said section 11BB is reproduced below: Section 11BB in the Central Excise Act, 1944 11BB. Interest on delayed refunds . If any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, not below five per cent. and not exceeding thirty per cent. per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty: Provided where any duty ordered to be refunded under sub-section (2) of section 11B in respect of an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on sub clause (ec) of clause (B) of Sub Section (5) of the Section 11B of the Central Excise Act, 1944 shall apply only in a case where there is a demand case where initially the demand is confirmed by the lower Authority, and when the same is set aside by the Tribunal /High Court /Supreme Court then only refund arises. In such case only, after setting aside the demand the refund arises out of such order by which demand was set aside and in that case only the interest is payable from the three months after the date of order of Tribunal/High Court/Supreme Court as the case may be. However, the contention of the revenue does not apply in a case where there is no demand but the case is of refund of suo-moto payment of service tax. Accordingly, the appellant is legally entitled for the interest after three months from the date of application for refund made first time. This issue has been considered in various judgments particularly in the Apex Court judgment of Ranbaxy Laboratories Ltd. (Supra), wherein the following judgment was passed: 8. Before evaluating the rival contentions, it would be necessary to refer to the relevant provisions of the Act. Section 11B of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount maintained with the Commissioner of Central Excise; (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (f) the duty of excise and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government, the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person. (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under Sub-section (1) of Section 11B of the Act and that the said Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Central Excise officers had taken the view that since the Tribunal had in its order not directed for payment of interest, no interest needs to be paid. 2. In this connection, Board would like to stress that the provisions of section 11BB of Central Excise Act, 1944 are attracted automatically for any refund sanctioned beyond a period of three months. The jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest. Simultaneously, Board would like to draw attention to Circular No.398/31/98-CX, dated 2-6-98 [1998 (100) E.L.T. T16] wherein Board has directed that responsibility should be fixed for not disposing of the refund/rebate claims within three months from the date of receipt of application. Accordingly, jurisdictional Commissioners may devise a suitable monitoring mechanism to ensure timely disposal of refund/rebate claims. Whereas all necessary action should be taken to ensure that no interest liability is attracted, should the liability arise, the legal provision for the payment of interest should be scrupulously followed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reckoning of the period for the purpose of payment of interest under Section 11BB of the Act is concerned, emphasis has been laid on the date of receipt of application for refund. In that case, having noted that application by the assessee requesting for refund, was filed before the Assistant Commissioner on 12th January 2004, the Court directed payment of Statutory interest under the said Section from 12th April 2004 i.e. after the expiry of a period of three months from the date of receipt of the application. Thus, the said decision is of no avail to the revenue. 15. In view of the above analysis, our answer to the question formulated in para (1) supra is 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. 16. As a sequitur, C.A.No.6823 of 2010, filed by the assessee is allowed and C.A.Nos.7637/2009 and 3088/2010, preferred by the revenue are dismissed. The jurisdictional Excise officers shall now determine the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h by the Hon ble High Court of Gujarat in the case of Purnima Advertising Agency Pvt. Ltd. and Ors. Vs. Union of India and Ors., 2016 (42) STR 785 (Guj.), the petitioner company had paid excess service tax. The Hon ble High Court while deciding the matter referred the Ranbaxy Laboratories (Supra) case and observed that on a plain reading of section 11BB of the Central Excise Act, it is evident that the object behind such provision is to provide for payment of interest to a party commencing from a period after three months from the date of application till the date of actual refund. The reason is not far to see, namely, that a party should not be prejudiced on account of any delay in deciding the application or on the ground that the party might have to challenge the order of refund before any other forum. 4.7. In the present case also the department is considering the date after the Tribunal has passed the order. We find that it is the order on refund which was settled by the Hon ble Gujarat High Court in Revenue s civil appeal in favour of the appellant whereby the refund claim of the appellant stand accrued to the appellant way back on the date of filing of refund application. ..... 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