Interest on delayed pre-deposit refund applies after three months of the appellate order when refund is not timely sanctioned.

Interest on delayed refund of a pre-deposit was payable where the refund was not sanctioned within three months of the appellate order and no stay by a superior court was shown. The Tribunal applied Circular No. 802/35/2004-CX, issued in light of ITC Ltd., which required return of the pre-deposit within three months from the date of the appellate forum's order. Earlier decisions relied on by the assessee were treated as inapplicable because one pre-dated the circular and the other did not consider the circular or the relevant factual sequence. The assessee was therefore entitled to interest for the period beyond the three-month limit until refund sanction.

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Issues: Whether the assessee was entitled to interest on delayed refund of the pre-deposit amount for the period after three months from the Tribunal's order until sanction of refund.

Analysis: The Tribunal held that Circular No. 802/35/2004-CX dated 08.12.2004, issued in the light of the decision in ITC Ltd., governed the claim and required return of the pre-deposit within three months from the date of the order of the appellate forum unless stayed by a superior court. The reliance placed on earlier decisions was found unhelpful, as one pre-dated the circular and the other did not consider the circular or the relevant factual sequence. On the facts, the refund was not sanctioned within the prescribed period after the Tribunal's order.

Conclusion: The assessee was entitled to interest on the delayed refund for the period beyond three months from the Tribunal's order until the date of refund sanction.

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