Exporters entitled to interest on delayed rebate claims as Supreme Court rules circular invalid with retrospective effect.

The Supreme Court upheld the Gujarat High Court's decision that a circular could not negate exporters' right to claim rebates for exports made between specific dates. The Court ruled that petitioners were entitled to interest on delayed rebate claims as the circular's invalidity had a retrospective effect. The adjudicating authority was directed to calculate and pay the interest promptly, and the petitioners were instructed to withdraw their appeals before the Appellate Commissioner.

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Issues Involved:
1. Entitlement to rebate claims.
2. Entitlement to interest on delayed rebate claims.

Summary:

1. Entitlement to Rebate Claims:
The petitioners, merchant exporters, lodged rebate claims with the Central Excise authorities on 9.7.2007 and thereafter. These claims were neither granted nor rejected due to a circular dated 8.12.2006, which the authorities believed disqualified the petitioners from such rebates. The Gujarat High Court in Welspun Gujarat Stahl Rohren Ltd. v. Union of India (2010(254) ELT 551(Guj.)) held that the circular could not negate the vested right of exporters to claim rebates for exports made between 8.12.2006 and 17.9.2007. The Supreme Court upheld this decision in Union of India v. Welspun Gujarat Stahl Rohren Ltd. (2010 (256) ELT A161(SC)). Consequently, the adjudicating authority sanctioned the rebate claims in September, October, and November 2010.

2. Entitlement to Interest on Delayed Rebate Claims:
The petitioners requested interest on the delayed rebate claims, which was denied by the Deputy Commissioner of Central Excise, citing compliance with the stipulated time limit post the Supreme Court's decision. The petitioners argued that the rebate claims were not sanctioned within three months from the date of filing, thus entitling them to interest u/s 11BB of the Central Excise Act. The Court noted that the rebate claims were neither granted nor rejected for a long period, and the High Court's decision declaring the circular invalid had a retrospective effect. The Court held that the petitioners were entitled to interest on the delayed payment of rebate after three months from the date of filing the claims, as per Section 11BB of the Central Excise Act.

Conclusion:
The petitions were allowed, directing the adjudicating authority to calculate and pay the interest on the rebate claims expeditiously, preferably within two months. The petitioners' appeals before the Appellate Commissioner were to be withdrawn.

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