Interest on delayed CENVAT credit refund is payable under Section 11BB where the Rule 5 refund remains unpaid beyond three months.

CENVAT credit refunded under Rule 5 of the CENVAT Credit Rules, 2002/2004 falls within clause (c) of the proviso to Section 11B(2) of the Central Excise Act, 1944 because it is a refund of duty-related credit used as input in export production. The governing notification is procedural and does not exclude interest. Accordingly, if such refund is not made within three months of the application, Section 11BB applies and interest is payable on the delayed amount. The Gujarat High Court therefore held that the assessee was entitled to interest on delayed refund of CENVAT credit under Rule 5.

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Issues: Whether interest under Section 11BB of the Central Excise Act, 1944 is payable on delayed refund of CENVAT credit granted under Rule 5 of the CENVAT Credit Rules, 2002/2004.

Analysis: Refund under Rule 5 of the CENVAT Credit Rules, 2002/2004 is a refund of accumulated credit arising from inputs used in export production, and the governing notification is procedural in nature and does not exclude interest. The refund falls within clause (c) of the proviso to Section 11B(2) of the Central Excise Act, 1944 because it relates to refund of credit of duty paid on excisable goods used as inputs in accordance with rules made under the Act. Once the refund is ordered under Section 11B(2), Section 11BB applies where the amount is not refunded within three months. The earlier Central Government circular regarding Rule 57F refunds, which is in pari materia with Rule 5, also supports this position and is binding on the revenue.

Conclusion: Interest under Section 11BB is payable on delayed refund of CENVAT credit under Rule 5, and the assessee is entitled to such interest.

Ratio Decidendi: A refund of CENVAT credit under Rule 5, being covered by Section 11B(2) of the Central Excise Act, 1944, attracts Section 11BB if not granted within three months of the refund application.

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