Tribunal grants duty refund appeal, rules interest due from May 1995.

The Tribunal allowed the appellant's appeal for a refund of duty paid on exported goods, setting aside the earlier rejection. The issue of interest on the refunded amount was raised, with the Commissioner initially rejecting the claim due to the refund application being filed before the enactment of Section 11-BB. However, the Tribunal held that interest should accrue from three months after the provision's introduction in May 1995, following Supreme Court precedent. The matter was remanded for the calculation of interest owed to the appellant.

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Issues:
Refund of duty paid on exported goods, rejection of refund claim, interest on refund amount, applicability of Section 11-BB of Central Excise Act, 1944, liability of revenue to pay interest on delayed refund.

Analysis:
The case involves the appellant, engaged in manufacturing Detergent Powder for export, seeking a refund of duty paid on inputs used in the manufacturing process. Initially, the refund claim was rejected by the Original Adjudicating Authority, and this decision was upheld by the Commissioner (Appeals). However, the Tribunal, in its order dated 20.04.2015, set aside the Original Adjudicating Authority's decision and allowed the appeal with consequential relief.

Upon receiving the Tribunal's order, the appellant approached the revenue for the refund amount, which was partially sanctioned. The issue arose regarding the appellant's claim for interest on the refunded amount, which was rejected. The Commissioner (Appeals) noted that interest should be paid from the date prescribed under Section 11-BB of the Central Excise Act, 1944. However, as the refund application was filed in December 1989, before the introduction of Section 11-BB, the Commissioner rejected the claim for interest.

The appellate authority initially acknowledged the liability to pay interest under Section 11-BB but rejected the claim due to the application being filed before the provision's enactment. The Tribunal highlighted the proviso to Section 11-BB, stating that interest is payable if the refund application is not decided within three months from the relevant date. The Tribunal found that the revenue's interest liability would start accruing after three months from 26 May 1995, the date of the provision's introduction.

Referring to a Supreme Court decision, the Tribunal emphasized that the revenue's interest liability begins after three months from the refund application date. Therefore, the Tribunal held that interest should be calculated from the expiry of three months from 26 May 1995. The impugned order was set aside, and the matter was remanded to the Original Adjudicating Authority for the calculation of interest owed to the appellant based on the Tribunal's decision.

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