2016 (7) TMI 1068 - AT - Central Excise

Tribunal Upholds 6% Interest Rate for Refund Appeals

M/s Bhor Industries Ltd. Versus Commissioner of Central Excise, Mumbai

The Tribunal dismissed the appeal, upholding the Commissioner (Appeals) decision to grant interest at the prescribed rate of 6% under Section 11BB for a ... Claim of interest on delayed refund - Rate of interest 6% or 12% - Held that:- It is seen that both the Hon'ble High Court and the Apex Court have inherent powers to grant interest. Tribunal being a creature of Central Excise Act cannot grant the relief, not prescribed under the said Act. I find that this argument regarding inability of Tribunal to act beyond the powers/relief available under the Central Excise Act was not raised in the Sheela Foam Ltd. (2003 (5) TMI 78 - CEGAT, NEW DELHI) and LML Ltd. (2014 (8) TMI 704 - CESTAT NEW DELHI). The contention that the relief granted by Hon'ble High Court of Kolkata and Hon'ble Apex Court cannot be treated as a precedent has also not been raised before the Tribunal in the case of Sheela Foam Ltd. (2003 (5) TMI 78 - CEGAT, NEW DELHI) and LML Ltd. (2014 (8) TMI 704 - CESTAT NEW DELHI). Following the decision of Tribunal in the case of Bajaj Auto Ltd. [2016 (4) TMI 885 - CESTAT MUMBAI] appeal dismissed - Decided against the assessee. Issues:1. Whether interest on refund of pre-deposit made under Section 35F should be granted at 6% as per Notification No. 67/03-CE or at 12% as claimed by the appellant.Analysis:The appellant, M/s Bhor Industries Ltd., won a case before the Tribunal regarding a pre-deposit made under Section 35F, leading to a refund due from 12.7.2004. Although the refund was granted on 14.7.2007, interest was not included. The appellant contested the denial of interest before the Commissioner (Appeals), who directed to grant interest on the refund for the delay. The Assistant Commissioner allowed interest at 6% as per Notification No. 67/03-CE. The appellant sought interest at 12%, which was rejected by the Commissioner (Appeals), leading to the current appeal before the Tribunal. The central issue is the rate of interest on the refund - 6% under the notification or 12% as claimed by the appellant.The appellant's counsel argued that previous decisions by the Hon'ble Supreme Court and High Courts supported interest at 12%, citing cases like ITC Ltd. and Madura Coats Pvt. Ltd. The counsel emphasized that in the absence of a prescribed rate at the material time, the rate set by the Supreme Court should apply. On the other hand, the AR relied on a Tribunal decision in the case of Bajaj Auto Ltd., stating that the Tribunal lacked the power to grant interest without a prescribed provision.Upon review, the Tribunal found that while the Supreme Court had granted interest at 12% in specific cases, it was not a general rule. The Tribunal noted that it lacked the power to grant relief beyond what was prescribed in the Central Excise Act. The Tribunal referenced previous decisions and observed that the relief granted by higher courts could not be considered a precedent for all cases. Ultimately, the Tribunal upheld the Commissioner (Appeals) decision to grant interest at the prescribed rate of 6% under Section 11BB, dismissing the appeal.In conclusion, the Tribunal dismissed the appeal on 01.07.2016, emphasizing the limitations of its power to grant interest beyond what is provided in the Central Excise Act. The decision highlighted the importance of following prescribed rates and legal provisions, even in cases where higher courts had granted different rates in specific instances.