Issue:- Interest is admissible for delayed sanction of refund claim to the assessee under section 11BB.

PJ/Case Law/2013-14/2109

Case:- MAHAJAN PROCESSORS P LTD Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI II

Citation:- 2014-TIOL-275-CESTAT-MUM

Brief facts:- The brief facts of the case were that the appellant had deposited the amount much prior to the issuance of the show-cause notice and deposits were made in terms of the stay order passed by the Tribunal. The appellant filed two refund claims, in both the cases refund claim was not sanctioned within the prescribed time limit from the date of application. Thus the appellant claimed interest on delayed refund. The appellant claimed for two refunds, first refund claim was pertaining to valuation case. The appellant were paying duty as per order dated 13.12.1986 of the Asst. Commissioner. On appeal, this Tribunal had remanded the matter back for denovo adjudication which was done on 16.2.2000. The appellant filed a refund claim on 25.5.2000 and same was sanctioned on 31.10.2000. The second claim pertains to clandestine manufacture and clearance. The appellant paid Rs.10,00,000/- against the said issue, Rs.5,10,000/- and Rs.4,90,000/- as directed by this Tribunal. The claim was filed on 25.1.1999 and refund was sanctioned on 02.07.1999. The appellant thus claimed interest on delayed refund.

Appellant’s contentions:- The learned counsel for the appellant pleaded that as per provision of section 11BB of the Central Excise Act, if any order for refund is not sanctioned within a period of 3 months from the date of application of filing the refund, the assessee is liable to receive interest on the delay in sanctioning of the refund after expiry of the period of three months from the date of application of filing the refund claim to the date of payment of refund to the assessee. They also placed reliance on the decision of the Apex Court in the case of Ranbaxy Laboratories Ltd. 2011 (273) ELT 3 (SC) = (2011-TIOL-105-SC-CX).

Respondent’s contentions:- The respondent reiterated the findings of the lower authorities.

Reasons of judgment:- The Hon’ble judge held that the issue was no more res integra in the light of the decision of Ranbaxy Laboratories Ltd. 2011 (273) ELT 3 (SC) = (2011-TIOL-105-SC-CX). In the said case it was held that Section 11BB of the Act comes into play only after an order for refund had been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application.

As per the said order, the interest on delayed refund was payable on expiry of period of 3 months from the date of receipt of the application under Section 11B(1) of the Central Excise Act, 1944. Therefore, he directed the adjudicating authority to pay the interest to the appellant on delayed refund on expiry of period of three months from the date of receipt of application under Section 11B(1). The adjudicating authority was directed to comply with the direction within 30 days of the receipt of this order.

Decision:- Appeal was disposed off.

Comment:- The analogy drawn from the case is that in case any duty that is paid is found refundable is not refunded within a period of three months from the date of filing of the refund application, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application to the date of payment of refund to the assessee. This view has also been affirmed by the Supreme Court in the decision given in the case of Ranbaxy Laboratories Ltd.

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PJ/Case Law/2013-14/2109

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