Interest - whether payable when delayed sanction of refund credited in Consumer Welfare Refund

PJ/Case Laws/2011-12/1497

Case: SALEM CYLINDERS PVT. LTD. v/s COMMISSIONER OF CENTRAL EXCISE, SALEM

Citation: 2011 (274) E.L.T. 566 (Tri.- Chennai)

Issue:- Whether interest payable to assessee on delayed sanction of refund even if refund credited in Consumer Welfare Fund?

Brief Facts:- The assessees herein are manufacturers of LPG cylinders supplied them to Public Sector Oil Companies such as IOCL, BPCL and HPCL. Vide letter dated 18-4-2000, the assessees requested for provisional assessment for the period 1-4-2000, since the oil companies have fixed provisional price for the cylinders supplied by the assessees during 2000-2001. The provisional assessment was ordered on 4-5-2000. The assessees executed a bond along with bank guarantee on 21-8-2000 as required under Rule 9B of the Central Excise Rules, 1944; extension of provisional assessment for further six months was sought as the oil companies could not finalize the price of LPG cylinders, and extension was granted on 20-7-2001. Further extension of provisional assessment was granted for another year and finally extended upto 31-12-2005. The provisional assessment was finalized vide order-in-original dated 24-3-06 passed by the Assistant Commissioner of Central Excise, in terms of Rule 7(3) of the Central Excise Rules, 2002, and he held that an amount of Rs. 4,36,364/- being the excess duty amount on account of downward revision of prices calculated by the oil companies for the period from 21-8-2000 to 31-5-2001 was eligible as refund and directed credit of this amount to the Consumer Welfare Fund, in view of the bar of unjust enrichment being attracted against the assessees. Against this order, the assessees appealed to the Commissioner (Appeals), who vide his order-in-appeal No. 116/2006, dated 12-6-2006, inter alia set aside the Assistant Commissioner's order crediting the refund amount for the period from 21-8-2000 to 31-5-2001, to the Consumer Welfare Fund and directed the Assistant Commissioner to sanction the above amount for the above period to the assessees. On 26-6-2006, the assessees claimed refund on the strength of the above order-in-appeal, and vide adjudication order dated 25-4-2007, the Dy. Commissioner while sanctioning the amount of Rs. 5,55,807/- as refund, rejected the claim for refund of Rs. 4,66,461/-, on the ground that M/s. Indian Oil Corporation Ltd., has not furnished any certificate of having realized the excess amount from the assessees (BPCL and HPCL had furnished such certificates). Aggrieved by the rejection of refund of Rs. 4,66,461 I-, the assessees preferred appeal and vide order dated 22-8- 2008, the Commissioner (Appeals) held that the order-in-appeal dated 12-6-2006 had attained finality and therefore, the assessees and the department are precluded from questioning/contending the correctness or otherwise of the order-in-appeal. He, therefore, allowed the appeal of the assessees and set aside the rejection of the refund claim of Rs. 4,66,461/-. Pursuant to this order, the assessees filed the claim for refund on 26-9-2008, which was received in the office of the Assistant Commissioner on 29-9-2008 and refund of Rs. 4,42,122/- (the assessees reduced their claim for refund from Rs. 4,46,461/- to Rs. 4,42,122/-) but rejected the plea for interest as he held that the refund was sanctioned within the statutory period of three months from the date of receipt of refund claim dated 26-9-2008. This order was upheld by the Commissioner (Appeals) in the impugned order.

Reasoning of Judgment:- The Tribunal held that the claim for refund dates back to 26-6-2006, which is the date on which they claimed refund on the basis of the order dated 12-6-2006 of the Commissioner (Appeals), who had directed sanction of Rs. 4,36,364/- to the assessees by setting aside the direction of the adjudicating authority for credit of the above mentioned amount to the Consumer Welfare Fund. It is not for the first time that the assessees claimed refund of the amount in question only in September, 2008, since claim for the amount ultimately sanctioned although reduced, was filed in 2006 June itself. It is clear that there has been a delay in sanction of the refund in December, 2008, well beyond the statutory period of three months. Therefore, the assessees claimed for interest at the appropriate rate due to the delay in sanction of the refund merits acceptance. The assessees are held to be eligible to interest after the expiry of three months from 26- 6-2006 till the date of payment of interest at the appropriate rate.

Decision:- Appeal allowed.

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PJ/Case Laws/2011-12/1497

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