2019 (11) TMI 668 - AT - Central Excise

Tribunal Upholds 6% Interest Rate for Delayed Refund Payments: Government Authority Affirmed

The Tribunal dismissed the appeal, affirming the 6% interest rate fixed by the Central Government through notification for delayed refund payments under ... Rate of Interest on Refund of duty paid - Section 11B (1) of Central Excise Act, 1944 - Revenue has taken a stand that there has already been a notification No. 67/2003 dated 12.09.2003 by which the rate of interest has been fixed at 6% - however, the section records the range for rate of interest i.e. from 5% to 30% but section itself specifies that the rate within such range as for the time being fixed by the Central Government by notification in the official gadget - HELD THAT:- In section 11BB, to clarify the rate of interest in the range of 5% to 30%, the statute itself has empowered the Central Government to fix any rate of interest for the time being by way of a notification. This clarifies that once there is a notification of Central Government fixing 6% as the rate of interest same has to be followed as having power of statute. Thus, it is clear that previous final order of this bench has apparent error on face of its record. The error of adjudication which is very much apparent irrespective once committed cannot be repeated. Appeal dismissed. Issues:1. Entitlement to interest on delayed payment of refund at 6% or 12%.2. Applicability of statutory provisions regarding interest rate fixation.3. Interpretation of Section 11BB of the Central Excise Act, 1944.Analysis:Issue 1: Entitlement to Interest RateThe case involved a dispute over the entitlement of the appellant to interest on a delayed refund payment at a rate of 6% or 12%. The appellant filed a refund claim for interest under Section 11B(1) of the Central Excise Act, 1944, after the refund was not sanctioned within three months. The appellant argued for a 12% interest rate based on legal precedents, while the department contended that the prescribed rate was 6%. The Tribunal analyzed the relevant provisions and decided that the interest rate prescribed by the Central Government, currently at 6%, should be followed, leading to the dismissal of the appeal.Issue 2: Statutory Provisions and NotificationThe Tribunal examined Section 11BB of the Central Excise Act, which specifies the entitlement to interest on delayed refunds. The section allows for interest at a rate fixed by the Central Government, not below 5% and not exceeding 30% per annum. The Tribunal noted that a notification (No. 67/2003) had already fixed the interest rate at 6%. Despite arguments for a higher rate based on judicial decisions, the Tribunal emphasized the statutory power of the Central Government to fix the interest rate, leading to the decision to uphold the 6% rate.Issue 3: Interpretation of Section 11BBThe Tribunal delved into the interpretation of Section 11BB, emphasizing that the statute empowers the Central Government to fix the interest rate by notification. While considering previous decisions ordering a 12% interest rate, the Tribunal highlighted the statutory provision's primacy over judicial interpretations. The Tribunal concluded that the previous decision of the bench, which ordered a 12% interest rate, contained an error as it did not consider the statutory provision empowering the Central Government to fix the rate. This led to the dismissal of the appeal and a different view from the previous decision.In the final judgment pronounced on 13.11.2019, the Tribunal dismissed the appeal, affirming the 6% interest rate fixed by the Central Government through notification. The decision highlighted the importance of adhering to statutory provisions in determining the interest rate on delayed refunds, ultimately upholding the prescribed rate despite arguments for a higher rate based on judicial precedents.