Tribunal overturns decision disallowing refund & interest on CENVAT credit, citing legal provisions

The Tribunal set aside the order disallowing the refund and interest on the sanctioned amount in an appeal against the Commissioner(Appeals)'s decision. Citing relevant cases and legal provisions, the Tribunal emphasized the entitlement to interest on CENVAT credit refunds. Relying on Supreme Court precedents, the Tribunal held that the impugned order was not legally sustainable. As a result, the appellant's appeals were allowed, and the order disallowing the refund and interest was overturned on 21/02/2018.

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Issues involved:
Appeal against order disallowing refund and interest on sanctioned amount.

Analysis:
The appeal was filed against an order passed by the Commissioner(Appeals) disallowing a refund claim partially and not granting interest on the sanctioned amount. The appellant, registered under various categories, sought refund of unutilized CENVAT credit on input services used for exported output services. The Assistant Commissioner partially rejected the claim, leading to the appeal. The appellant specifically requested interest on the sanctioned amount, which was not addressed in the impugned order. The counsel argued that interest should be granted as per various High Court and Supreme Court decisions equating CENVAT credit refund to duty refund under Section 11B of the Central Excise Act. The counsel cited relevant cases to support the claim for interest on the refund.

The counsel further argued that Section 11B covers both duty and CENVAT credit refunds, making Section 11BB applicable for interest on CENVAT credit refunds. Citing judgments like Ranbaxy Laboratories Ltd. vs. UOI and Sterlite Industries Ltd., it was emphasized that interest should be granted from three months after the refund application until the refund is granted. The counsel also referred to circulars clarifying the applicability of Section 11BB for refunds sanctioned beyond three months. Additionally, it was noted that the Department's appeal against a similar decision was dismissed by the Supreme Court, reinforcing the entitlement to interest on the sanctioned refund.

The Tribunal, in light of the settled legal position established by the Supreme Court, held that the impugned order was not sustainable in law. Consequently, the order disallowing the refund and interest was set aside, allowing the appeals of the appellant. The judgment was pronounced on 21/02/2018.

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