Delayed refund interest under Section 11BB starts after three months from the refund application, not sanction date.

Interest on delayed refund of accumulated CENVAT credit becomes payable under Section 11BB of the Central Excise Act, 1944 after three months from receipt of the refund application, not from the later date of sanction. The statutory interest compensates the assessee for delay beyond the prescribed period, so subsequent appellate sanction of refund does not defer the interest start date. On this interpretation, denial of interest on the delayed refund was unsustainable and the assessee was entitled to consequential relief.

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Issues: Whether interest was payable on the delayed refund of accumulated CENVAT credit from the expiry of three months after the refund application until the date of actual sanction of refund.

Analysis: The dispute turned on the settled interpretation of Section 11BB of the Central Excise Act, 1944. The governing principle applied was that liability to pay interest begins after three months from the date of receipt of the refund application under Section 11B(1), and not from the date on which the refund is ultimately sanctioned. The fact that the refund was granted later in the appellate process did not postpone the commencement of interest, because statutory interest compensates the assessee for delay beyond the prescribed period.

Conclusion: Interest was payable on the delayed refund from the expiry of three months after the refund applications were filed until the date of actual refund, and the denial of interest was unsustainable.

Final Conclusion: The assessee succeeded and the rejection of interest on delayed refund was set aside, with consequential relief.

Ratio Decidendi: Under Section 11BB of the Central Excise Act, 1944, interest on a refund becomes payable after three months from the date of receipt of the refund application, irrespective of the later date on which the refund is sanctioned.

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