2014 (3) TMI 755 - HC - Central Excise

Court affirms interest on delayed refund under Central Excise Act. Interest from application date.

The Commissioner of Central Excise PuneII, Commissionerate Versus M/s. Sulaki Chemicals Pvt. Ltd.

The Commissioner of Central Excise PuneII, Commissionerate Versus M/s. Sulaki Chemicals Pvt. Ltd. - 2014 (310) E.L.T. 511 (Bom.) Issues:- Interpretation of Section 11BB of the Central Excise Act, 1944 regarding the payment of interest on delayed refund.- Determining the relevant date for the purpose of refund under Section 11BB.- Applicability of the Explanation to Section 11BB in the context of appellate orders for refund.Analysis:1. The appellant raised two substantial questions of law regarding Section 11BB of the Central Excise Act, 1944. The first question pertained to whether the order passed by the Appellate Authority becomes an order of refund under subsection (2) of Section 11B, making the date of the Appellate Authority's order relevant for refund under Section 11BB. The second question queried the correctness of CESTAT in allowing interest on delayed refund under Section 11BB.2. The appeal by the revenue stemmed from the respondent (assessee) paying Central Excise Duty to RG 23 Part II account, which was later rectified by payment through PLA. The assessee claimed a refund for the duty paid from RG 23 Part II account. The Asst. Commissioner granted a partial refund and rejected the remainder as time-barred. On further appeal, the remaining refund was also allowed. The issue arose when the assessee requested interest on the balance refund amount, which was initially denied but later granted by CESTAT.3. The revenue contended that interest would be payable after three months from the date of the Commissioner (Appeals) order, not prior to it. However, the Court rejected this argument, citing Section 11BB of the Act. The Court emphasized that interest on the refund amount must be paid from the date immediately after three months from the receipt of the application to the original authority till the refund of such duty, as per the substantive provision of Section 11BB.4. The Explanation to Section 11BB was crucial in determining the applicability of interest on delayed refund. It clarified that orders of refund by the Appellate Authority or Court are deemed to be orders under subsection 2 of Section 11B for the purpose of Section 11BB. Therefore, the appellate order allowing the refund relates back to the original authority's order, necessitating the payment of interest from the specified date.5. The Court found the revenue's contention to be unsubstantiated, concluding that no substantial question of law arose from the Tribunal's order. Consequently, the appeal was dismissed, with no order as to costs, affirming the decision to allow interest on the delayed refund as per the provisions of Section 11BB.