Interest claim for delayed sanction of the refund.

PJ/Case law/2013-14/1900

Case:- MADURA COATS PRIVATE LTD. VERSUS COMMISSIONER OF C. EX., MADURAI

Citation:- 2013 (294) E.L.T. 113 (Tri.- Chennai)

Brief facts:- The appeal relates to claim for interest on account of delayed refund. Duty demand was confirmed against the assessees on 'Grey Tyre Cord Fabrics' manufactured and consumed captively in further manufacture of 'Dipped Tyre Cord fabrics'. The demand of 1996 was set aside in 1998 and on 26-3-2002 the assessees filed a claim for refund of duty amount paid by them which was rejectedbythem as time-barred as well as on unjust enrichment.The Tribunal dismissed the appeal of the Revenue against the order of the Commissioner ( Appeals) dated 12-5-1998, whereby he set aside the demand confirmed by the adjudicating authority. In March, 2004, 'the assessee appealed against the Assistant Commissioner's order rejecting the refund claim. The Commissioner (Appeals) set aside the finding of_, the adjudicating authority that the refund claim was hit by bar of unjust enrichment. In August, 2010, the Tribunal passed Final Order No. 855/2010, dated 3-8-2010 12011 (263) E.L.T.613 (Tribunal)] allowing the appeal of the assessees and directing grant of consequential benefits to the appellants and in October, 2010, the Assistant Commissioner sanctioned refund based upon the Tribunal's order mentioned hereinabove. However, since the refund was sanctioned without any interest, the assessees appealed against non-grant of interest before the Commissioner (Appeals) and the appeal was rejected by the lower appellate authority; hence this appeal.

Appellant’s contention:- The appellant prayed for granting interest on the delayed refund granted to them.

Reasoning of judgment:- After hearing the submissions, it was held that it is clear that the claim for refund was filed on 26-3-2002 and the legal position is that the three months' period for grant of refund is to be calculated from the date of making an application for refund and not from the date of sanction of the refund. This is the view taken by the Tribunal in several cases including that of the same assessees as seen from - 2008 (228) E.L.T. 433 (Tri.-Chennai). Since the refund was sanctioned only in October, 2010while the claim for refund was made on 26-3-2002, there is no dispute that there is an inordinate delay in grant ofthe refund, thereby justifying the assessee's claimfor interest on therefund amount for the period from 26-6-2002 to 29-10-2010 (i.e., from the expiry of three months from the date of filing the refund claim till the date of payment). Therefore, the impugned order rejecting the interest claim of the assessee is set aside and it was held that the assessees are entitled to interest for the period from 26-6-2002 to 29-10-2010. Since the matter has been pending for several years, it wouldbe proper ifthe interest amount is paid as early as possible to the assessees.

Decision:- Appeal allowed.

Comment:- Asevery assessee has right to recover interest on the amount of delayed refund of service tax after the expiry of 3 months from the date of receipt of application till the date of refund of such tax at a rate, as may be specified for the time being fixed by Central Government by Notification, the present appeal was allowed.

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PJ/Case law/2013-14/1900

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