Gujarat High Court: Interest under Section 11BB Central Excise Act starts 3 months post refund claim.

The Hon'ble Gujarat High Court ruled in favor of the appellant, holding that interest under Section 11BB of the Central Excise Act, 1944 commences three months after the refund claim if the amount is not refunded within that period. The appellant was entitled to interest from 18.04.1999, the date three months after the refund claim, until the payment was made, despite the Revenue's contentions. The appeal was allowed, granting the appellant the interest claimed.

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Issues:
- Entitlement to interest under Section 11BB of Central Excise Act, 1944 after the refund claim.
- Interpretation of Section 11BB regarding the commencement of interest payment.

Analysis:
- The appeal was filed against an order-in-appeal passed by the Commissioner (Appeals) Daman, regarding the refund of excess duty paid by the appellant due to provisional assessment under MRP based assessment. The appellant claimed the assessment should have been based on the transaction value of the goods under Section 4 of the Central Excise Act, 1944. The refund application was initially rejected on the grounds of unjust enrichment, leading to litigation until being settled by the Hon'ble Gujarat High Court. The appellant sought interest under Section 11BB from the date of the refund claim till the payment was made. The issue revolved around the entitlement to interest under Section 11BB post the refund claim. The appellant cited judgments by the Hon'ble Supreme Court to support their claim.

- The Revenue contended that interest on the refunded amount should be rejected due to a Special Leave Petition (SLP) filed by the department against the High Court's order. However, no stay was granted by the Hon'ble Supreme Court. The Tribunal found that the issue was covered by the judgment of the Hon'ble Supreme Court in a similar case. The Court's interpretation of Section 11BB clarified that interest becomes payable three months after the refund claim if the amount claimed is not refunded within that period. Therefore, interest under Section 11BB commences from the date of expiry of three months from the receipt of the refund application, not from the date of the order of refund. As the facts indicated that the refund claim was filed on 18.01.1999, the appellant was deemed eligible for interest from 18.04.1999 till the payment was made. Consequently, the appeal was allowed in favor of the appellant.

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