Provisional assessment refunds governed by Section 11B once finality is reached; delayed interest runs after three months.

Refund arising from finalisation of provisional assessment was treated as governed by Section 11B of the Central Excise Act once the final assessment order had been challenged and the appellate process had attained finality. The Tribunal noted that, for the relevant period, Rule 9B(5) did not ordinarily attract Section 11B in the case of provisional assessment refunds, but the position changed where the final order was appealed and the refund entitlement arose only after the appellate decision. Interest under Section 11BB was therefore payable only after three months from the date the refund entitlement became final, and not for the earlier period before finality.

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Issues: Whether refund arising from finalisation of provisional assessment, after the departmental challenge to the final assessment order attained finality, was governed by Section 11B of the Central Excise Act, 1944, and whether interest on delayed refund under Section 11BB was payable from the expiry of three months after such finality.

Analysis: The refund arose from finalisation of provisional assessment under Rule 9B(5) of the Central Excise Rules, 1944. The Tribunal noted that, for the period prior to 25.6.1999, the refund mechanism under Rule 9B(5) was not governed by Section 11B in the ordinary course; however, where the final order under Rule 9B(5) is appealed against, any refund claim arising as a consequence of the appellate decision is governed by Section 11B. Since the departmental appeal against the order finalising provisional assessment was decided on 30.5.2001 and that order attained finality, the refund claim was treated as falling within Section 11B. On that basis, the claim for interest was held to be maintainable only after the refund entitlement became final, and not for the earlier period before finality.

Conclusion: The refund claim was governed by Section 11B, and the assessee was entitled to interest on the delayed refund after three months from 30.5.2001 until 7.4.2003.

Final Conclusion: The assessee succeeded in part and obtained interest on the delayed refund for the period following finality of the refund entitlement, but not for the prior period.

Ratio Decidendi: Where a refund consequent upon finalisation of provisional assessment becomes final only after appellate proceedings, the refund is governed by Section 11B of the Central Excise Act, 1944, and interest under Section 11BB runs from the expiry of three months after the date on which the refund entitlement attains finality.

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