2018 (4) TMI 478 - AT - Service Tax

Grant of Interest on Delayed Payment Refund Claims under Central Excise Act: Appellant Appeals Succeed

The Tribunal allowed the appellant's appeals concerning the denial of interest on delayed payment refund claims. The appellant, engaged in exporting ... Entitlement to Interest - delayed payment of refund - Held that: - the Hon'ble Apex Court in the case of Ranbaxy Laboratories Ltd. Vs. I-JOI [2011 (10) TMI 16 - Supreme Court of India] has upheld grant of interest in case of late disbursal of refund from the expiry of three months of refund application till refund is granted and not from the date of order of refund - refund allowed - appeal allowed - decided in favor of appellant. Issues:Refund claim denial of interest on delayed payment.Analysis:The appellant, engaged in exporting services, filed 10 appeals against an order allowing the refund claim but denying interest on delayed payment. The services provided were taxable under Information Technology Software Services and qualified as export under Rule 6A of the Service Tax Rules, 1994. The appellant availed credit of service tax paid under CENVAT Credit Rules, 2004, and filed refund claims as they couldn't utilize the credit. The Order-in-Original partly allowed the refund claims, which led to the appeals. The main contention was the denial of interest on the refund. The appellant argued that interest should be granted based on judicial precedents from High Courts and the Supreme Court, emphasizing that CENVAT credit is equivalent to duty payment. Various court decisions were cited to support the claim for interest on delayed refunds, including the case of Rajalakshmi Textile Processor (P) Ltd. and Reliance Industries Ltd. The appellant also referred to circulars and previous rulings to strengthen their case.The learned counsel for the appellant highlighted that the impugned order was not sustainable as it contradicted binding judicial precedents. The counsel argued that interest on delayed refunds should be granted, drawing parallels between CENVAT credit and duty payment. Citing relevant cases and circulars, the appellant's counsel contended that Section 11B and 11BB of the Central Excise Act applied to refund claims under CENVAT Credit Rules. The counsel also referenced decisions from the Mumbai Tribunal and the Supreme Court to support the claim for interest on delayed refunds. Ultimately, the Tribunal found merit in the appellant's arguments, considering the settled legal position established by the Supreme Court and set aside the impugned order, allowing the appeals of the appellant.