2017 (10) TMI 1115 - AT - Central Excise

Calculation of Interest on Delayed Refund Under Central Excise Act

The Tribunal upheld the Commissioner (Appeals)'s decision that interest on delayed refund should be calculated as per Section 11BB of the Central Excise ... Interest on delayed refund - whether interest on delayed refund is payable during the period between expiry of three months from the date of filing the refund application for the principal amount, till its refund; or, from the date, when the principal amount was paid by the applicant? - Held that: - the issue with regard to computation of the period for payment of the interest amount is no more res Integra, in view of the judgment of Hon’ble Supreme Court in the case of Shreeji Colour Chem Industries [2008 (9) TMI 12 - SUPREME COURT], wherein it has been ruled that payment of interest has to be made in accordance with Section 11BB ibid, from the date of expiry of three months from refund application, till the date of its refund. In the present case, since the Tribunal is entertaining and disposing the appeal filed under the Central Excise statute, the provisions contained in the statute alone has to be considered for deciding the issue involved in the appeal. On perusal of the said statutory provisions, it reveals that other than Section 11BB ibid, no other provision exists in the Central Excise statute, dealing with payment of interest from the date of actual deposit of the disputed amount. Thus, such interpretation placed by the appellant cannot be accepted, in absence of any statutory mandates. The appellant is only entitled for interest for delay of 25 days in sanction of refund amount - appeal dismissed - decided against appellant. Issues Involved:1. Computation of interest on delayed refund - from the date of filing the refund application or from the date of payment of principal amount.Analysis:Issue 1: Computation of interest on delayed refundThe appeal raised the question of whether interest on delayed refund should be calculated from the date of filing the refund application or from the date of payment of the principal amount. The appellant argued for interest from the date of deposit of the disputed amount, citing judgments from the Hon'ble Supreme Court and the Hon'ble Madras High Court. On the contrary, the Revenue contended that interest should be paid as per Section 11BB of the Central Excise Act, 1944, which mandates interest if the refund is not paid within three months from the application date. The Tribunal examined the case record and noted that the refund application was filed on 05.06.2014 and sanctioned on 29.09.2014 with a delay of 25 days. The Tribunal referred to the Supreme Court judgment in Shreeji Colour Chem Industries, emphasizing that interest must be paid as per Section 11BB, from the expiry of three months from the refund application to the refund date. The Tribunal highlighted that the Central Excise statute lacks provisions for interest from the date of actual deposit of the disputed amount. Therefore, the appellant's interpretation was rejected due to the absence of statutory mandates. The judgments cited by the appellant were deemed irrelevant as they did not concern the interpretation of Section 11BB specifically.In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision that the appellant is only entitled to interest for the 25-day delay in refund sanction. Consequently, the appeal was dismissed, affirming the impugned order.This comprehensive analysis delves into the core issue of interest computation on delayed refunds, highlighting the legal interpretations, arguments presented by both parties, relevant case law references, and the final decision rendered by the Tribunal.