Tribunal directs interest payment on delayed refunds under Central Excise Act

The Tribunal allowed the appeal, finding the Commissioner(Appeals)'s order unsustainable for denying interest on delayed refunds. Relying on legal precedents and the mandatory nature of interest payment under Section 11BB of the Central Excise Act, the Tribunal directed the calculation of interest from the expiry of the 3-month period till payment, in line with the Apex Court's ruling in Ranbaxy Laboratories Ltd. The appeal was disposed of in favor of the appellant, emphasizing the obligation to pay interest on delayed refunds.

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Issues:
1. Refund of excise duty without interest.

Analysis:
The appeal was against an order by the Commissioner(Appeals) granting a refund but denying interest on the same. The appellant, engaged in the production and supply of gases, underwent a change in shareholding and was renamed. Initially held liable for excise duty, penalties, and interest, the appellant appealed to the Tribunal. The Tribunal directed the appellant to deposit sums under protest, later allowing the appeals and setting aside the demands. Subsequent refund applications were sanctioned, but the amounts were adjusted against other demands. The Commissioner(Appeals) ordered the disbursal of the refunds without interest, leading to the present appeal.

The appellant argued that interest under Section 11BB of the Central Excise Act is mandatory after 3 months from the refund application. Citing legal precedents and CBIC circulars, the appellant contended that interest must be paid automatically if refunds are delayed. The appellant referenced cases where interest was awarded despite adjustments against other demands. The respondent argued that interest should be paid from the Tribunal's decision date, relying on a different Tribunal case.

The Tribunal found the impugned order lacked reasons for denying interest on delayed refunds. Citing the Apex Court's ruling in Ranbaxy Laboratories Ltd., the Tribunal held that interest becomes payable after 3 months from the refund application. Referring to circulars and legal precedents, the Tribunal emphasized the mandatory nature of interest payment. Noting the Karnataka High Court's decision in Vijai Industries, the Tribunal set aside the Commissioner(Appeals) order, directing the quantification of interest from the expiry of the 3-month period till payment.

In conclusion, the Tribunal allowed the appeal, finding the impugned order unsustainable in law. By following legal precedents and court decisions, the Tribunal directed the original authority to calculate interest from the specified period till payment, disposing of the appeal in favor of the appellant.

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