2012 (10) TMI 581 - CGOVT - Central Excise

Court clarifies interest liability under Section 11BB of Central Excise Act, upholds payment on delayed rebate claims.

The court held that interest liability under Section 11BB of the Central Excise Act arises after three months from the rebate application's receipt. The ... Rebate claim – Duty paid on the Polyester Staple Fibre manufactured and cleared for export from their factory - rebate claims applications under the provisions of Notification No. 19/2004-C.E. (N.T.), - claims were returned back to applicant under letter/deficiency memo to get certificate from Port authorities as Customs seal mentioned in Shipping Bill was found missing on Bill of Lading/Mate Receipt or as an alternative to furnish an undertaking to the effect of submitting the respective Bank Realization Certificate – Held that:- Rebate claims were filed alongwith all the requisite documents. The enquiry made by department from the Customs at port of export regarding genuineness of Bill of Lading/Mate Receipt cannot be a reason of delaying the sanction of rebate claim - no specified document which was not submitted by applicant - claims were required to be sanctioned within 3 months as all the requisite documents were submitted by exporter alongwith rebate claims - interest is admissible and payable to the applicant in terms of Section 11BB of Central Excise Act, 1944. Issues Involved:1. Entitlement to interest on delayed rebate claims under Section 11BB of the Central Excise Act, 1944.2. Completeness of rebate application and the requirement of Bank Realization Certificate (BRC).3. Jurisdictional issues regarding the Central Government's authority to decide on interest matters.4. Procedural delays and their impact on interest liability.Detailed Analysis:1. Entitlement to Interest on Delayed Rebate Claims:The core issue revolves around whether the interest liability under Section 11BB of the Central Excise Act, 1944 arises after the expiry of three months from the date of filing of the rebate claim or after the rebate claim becomes due for sanction as per the satisfaction of the rebate sanctioning authority. The judgment reiterates that as per Section 11BB, interest is payable if the refund is not granted within three months from the date of receipt of the application. This provision is supported by various judicial precedents, including the Hon'ble Bombay High Court's decision in the case of Swaraj Mazda Ltd. v. UOI, which states that interest is payable after the expiry of three months from the date of receipt of the refund application, regardless of whether the application is complete or not.2. Completeness of Rebate Application and Requirement of BRC:The applicant argued that there is no provision in Rule 18 or in Notification No. 19/2004-C.E. (N.T.) requiring the submission of the original Bank Realization Certificate (BRC) to sanction interest on the rebate claim. The judgment upheld the applicant's view, stating that the necessary documents were submitted along with the rebate claims as per para 8.3 of the C.B.E.C. Excise Manual. The court emphasized that the absence of a customs seal on the Bill of Lading/Mate Receipt is a clerical error and should not delay the sanction of the rebate claim. The reliance on the Public Notice No. 21/2009 by the Commissioner (Appeals) was deemed misplaced as it pertains to the refund of export duty under the Customs Act, not to rebate claims under the Central Excise Rules.3. Jurisdictional Issues:The department raised an objection regarding the jurisdiction of the Central Government to decide on matters of interest payment. The court clarified that the issue of interest on rebate claims falls within the ambit of Section 35EE of the Central Excise Act, 1944, and thus, the revision application is maintainable.4. Procedural Delays and Impact on Interest Liability:The judgment noted that the rebate claims were initially returned due to missing customs seals and other clerical issues. However, these procedural deficiencies were rectified by the applicant, and the claims were resubmitted. The court held that the delay in processing the rebate claims due to procedural issues does not absolve the department from paying interest. The interest liability arises after three months from the date of the initial submission of the rebate claims, provided all requisite documents were submitted.Conclusion:The court concluded that the interest liability under Section 11BB arises after the expiry of three months from the date of receipt of the rebate application. The judgment upheld the orders-in-appeal passed by the Commissioner of Central Excise (Appeals) Lucknow, directing the department to pay interest on the delayed rebate claims. The court set aside the order-in-appeal No. SB/18/LTU/MUM/09 dated 12-10-09, which had denied the interest. The revision applications were disposed of accordingly.