2016 (4) TMI 885 - AT - Central Excise

Tribunal Upholds Interest Rate Decision on Refunds under Central Excise Act

The Tribunal affirmed the decision of the Ld. Commissioner (Appeals) regarding the interest rate on delayed refunds, emphasizing the statutory provisions ... Interest on delayed refund under Section 11BB - rate of interest prescribed by notification under Section 11BB - limitation of statutory forum to grant interest beyond statute - Board Circular cannot prescribe rate of interest contrary to statute - Supreme Court's exercise of inherent powers in awarding interest not automatically applicableInterest on delayed refund under Section 11BB - rate of interest prescribed by notification under Section 11BB - Interest on delayed sanction of refund is payable only at the rate prescribed under Section 11BB and the notifications issued thereunder; the appellant is not entitled to interest at 12% as claimed. - HELD THAT: - The only statutory provision conferring entitlement to interest on delayed refunds is Section 11BB of the Central Excise Act; accordingly interest must be paid at the rates prescribed in notifications issued under that provision. The Tribunal, being a creature of the statute, must apply the statutory rates and cannot award a higher rate in the absence of statutory authority. The Commissioner (Appeals) correctly directed payment of interest at the rates (8%/6%) applicable for the period in question in terms of Section 11BB, and that direction is legally sustainable. [Paras 5]Interest is payable at the rate prescribed under Section 11BB/notification; claim for 12% is not allowed.Supreme Court's exercise of inherent powers in awarding interest not automatically applicable - limitation of statutory forum to grant interest beyond statute - A Supreme Court award of interest at 12% under its inherent powers does not create a binding precedent obliging the statutory forum to allow the same rate where the statute prescribes different rates. - HELD THAT: - The appellant relied on the Supreme Court decision in CCE v. ITC granting 12% interest. The Tribunal observed that the Supreme Court may exercise inherent powers in a given case to award interest, but such exercise cannot be treated as a general precedent permitting the statutory authority or Tribunal to disregard the statutory scheme. The statutory forum's powers are confined to what the Central Excise Act provides; therefore the Supreme Court's exercise of inherent power in a different case does not mandate payment of 12% in the present statutory context. [Paras 5]The Supreme Court's grant of 12% in a particular case under inherent powers does not entitle the appellant to 12% where the statute prescribes other rates.Board Circular cannot prescribe rate of interest contrary to statute - interest on delayed refund under Section 11BB - The Board Circular directing prompt grant of pre-deposit refunds does not prescribe a rate of interest and cannot supplant the rate provided under Section 11BB and notifications. - HELD THAT: - The Board's circular called for field formations to grant refund of pre-deposit within three months but did not specify any rate of interest. The circular therefore cannot be read as prescribing or altering the statutory rate of interest, which remains governed by Section 11BB and the notifications issued thereunder. Consequently reliance on the circular to claim 12% is misplaced. [Paras 5]The Board Circular does not prescribe interest rates and cannot override the statutory rates under Section 11BB.Final Conclusion: The impugned order of the Commissioner (Appeals) directing payment of interest at the rates applicable under Section 11BB (as per the notifications for the relevant period) is upheld; the appellant's claim for 12% is rejected and the appeal is dismissed. Issues Involved:- Entitlement to interest on delayed payment of refund- Applicability of interest rate on delayed refund- Interpretation of Section 11BB of the Central Excise Act- Consideration of Hon'ble Supreme Court judgment and Board CircularEntitlement to Interest on Delayed Payment of Refund:The appeal in this case was against an Order-in-Appeal that allowed the appellant's claim for interest on delayed payment of refund. The appellant sought interest at a rate of 12% on a pre-deposit refund. The appellant relied on a judgment by the Hon'ble Supreme Court in CCE vs. ITC, where 12% interest was allowed on delayed refunds. The appellant contended that they were entitled to the same interest rate based on this precedent.Applicability of Interest Rate on Delayed Refund:The Ld. Commissioner (Appeals) had allowed interest on the delayed refund at the rate applicable during the period under reference as per the notification issued under Section 11BB of the Central Excise Act. On the other hand, the Revenue argued that there is no statutory provision for granting interest at a rate of 12%, emphasizing that interest on refund is provided under Section 11BB, and the appellant should only receive interest as per the rate prescribed in the notifications issued under Section 11BB.Interpretation of Section 11BB of the Central Excise Act:The Tribunal analyzed Section 11BB of the Central Excise Act, which is the only provision granting interest on delayed refunds. The Tribunal held that interest shall be payable as per the rate prescribed under Section 11BB. While acknowledging the Hon'ble Supreme Court's decision allowing 12% interest in a specific case, the Tribunal clarified that it had limited power to decide cases only as per the statute of the Central Excise Act. The Tribunal emphasized that the Supreme Court's decision on interest rates could not be applied universally and that the Board's Circular did not prescribe an interest rate, as it is governed by Section 11BB.Consideration of Hon'ble Supreme Court Judgment and Board Circular:The Tribunal upheld the Ld. Commissioner (Appeals)'s order, stating that it was proper and legal, requiring no interference. The Tribunal dismissed the appeal while directing the Adjudicating Authority to grant interest at the rate ordered by the Commissioner (Appeals), either 8% or 6% depending on the period. The Tribunal highlighted that the Board's Circular could not override the statutory provisions of Section 11BB and the notifications issued thereunder, emphasizing the limitations of the Tribunal's authority under the Central Excise Act.In conclusion, the Tribunal affirmed the decision of the Ld. Commissioner (Appeals) regarding the interest rate on delayed refunds, emphasizing the statutory provisions of Section 11BB and the limited scope of the Tribunal's authority in deciding cases under the Central Excise Act.