Statutory interest on delayed refund runs from the original refund application, not from the later appellate sanction.

Statutory interest on delayed refund under section 11BB of the Central Excise Act runs from three months after receipt of the original refund application, even where the refund is later sanctioned pursuant to an appellate order. The Explanation to section 11BB treats an appellate refund order as an order under section 11B(2) for that provision, but it does not postpone the start of interest to the date of the appellate order. On the facts, the refund claim had been filed earlier and the refund was ultimately held due, so interest accrued from expiry of three months after the original application.

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Issues: Whether interest on a refund sanctioned pursuant to an appellate order is payable after three months from the date of the original refund application or only after three months from the date of the appellate order.

Analysis: Section 11BB of the Central Excise Act, 1944 provides for interest on delayed refunds from the date immediately after expiry of three months from the date of receipt of the refund application. Its Explanation deems an appellate order of refund passed by the Commissioner (Appeals), the Appellate Tribunal, National Tax Tribunal, or a court to be an order under section 11B(2) for the purposes of section 11BB. On the facts, the refund application had been filed before the relevant notification and the refund was ultimately held to be due; therefore, the commencement of interest was linked to the original application and not postponed to the later appellate order.

Conclusion: Interest on the refund was payable from the expiry of three months after the date of filing of the original refund application, and not from three months after the appellate order. The question was answered against the Revenue and in favour of the assessee.

Ratio Decidendi: Under section 11BB, statutory interest on a delayed refund runs from three months after receipt of the refund application, even where the refund is ultimately sanctioned by an appellate authority.

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