Court Orders Interest Payment on Petition, Non-Compliance Results in Liability

The court allowed the petition, directing the respondents to pay interest at the prescribed rate within one month from the receipt of the certified copy of the order. Failure to comply would result in the Sanctioning/Competent Officer being liable to pay interest at 6% from their own pocket and potential contempt proceedings.

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Issues Involved:
1. Quashing of order declining interest payable under Section 11BB of the Central Excise Act, 1944.
2. Entitlement to interest on delayed refund under Section 11BB.
3. Interpretation of Section 11BB in relation to the date of filing the refund application.

Issue-wise Detailed Analysis:

1. Quashing of Order Declining Interest Payable under Section 11BB:
The petitioner sought quashing of the order dated 27.09.2018 by the Assistant Commissioner, CGST, Yamuna Nagar, which declined interest payable under Section 11BB of the Central Excise Act, 1944, even though the principal amount had been refunded. The court allowed the application to place on record the reply by way of affidavit from the Commissioner of CGST, Panchkula.

2. Entitlement to Interest on Delayed Refund under Section 11BB:
The petitioner was engaged in importing and domestically procuring Zinc Ash, converting it into Zinc Ingots and Zinc Sulphate. Due to a change in the tariff classification of Zinc Sulphate, Central Excise duty became payable from 01.01.2007. The petitioner deposited the duty amount by reversing Cenvat Credit following a show cause notice. Subsequently, a notification exempted Zinc Sulphate retrospectively from 01.01.2007, prompting the petitioner to file a refund application on 03.09.2009. The refund application was initially rejected and later allowed by the Tribunal on 21.02.2018. The petitioner requested the refund along with interest, but the respondent only sanctioned the refund without interest. The petitioner argued that the matter was covered by the Supreme Court judgment in Ranbaxy Laboratories Ltd. Versus UOI, which mandates interest on delayed refunds.

3. Interpretation of Section 11BB in Relation to the Date of Filing the Refund Application:
The court examined Section 11BB, which stipulates that if duty is not refunded within three months from the date of the refund application, interest is payable. The court referenced the Supreme Court judgment in Ranbaxy Laboratories Ltd. Versus UOI, which clarified that interest under Section 11BB is payable from the expiry of three months from the date of the refund application, not from the date of a favorable order by an appellate authority. The court emphasized that the liability to pay interest relates back to the date of filing the refund application. In this case, the refund application was filed on 03.09.2009, and the refund was sanctioned on 27.09.2018. Therefore, the respondents were liable to pay interest from three months after 03.09.2009.

Conclusion:
The petition was allowed, directing the respondents to pay interest at the prescribed rate within one month from the receipt of the certified copy of the order. Failure to comply would result in the Sanctioning/Competent Officer being liable to pay interest at 6% from their own pocket and potential contempt proceedings.

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