Tribunal grants interest on refund, cites statutory provisions

The Tribunal allowed the appeal, holding that the appellant was entitled to interest at a rate of 12% for delayed refund payment, based on statutory provisions and a Supreme Court ruling. The initial rejection of the abatement claim was overturned, and the appellant was granted a refund of duty with interest. The Tribunal emphasized that the interest rate should fall within the range specified by the Central Government and that notifications cannot override statutory provisions, as clarified by the Supreme Court in a similar case.

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Issues:
Claim of abatement of duty for a specific period, rejection of initial claim, entitlement for refund of duty with interest, dispute regarding the rate of interest for delayed refund.

Analysis:
The appeal was filed against the Order-in-Appeal rejecting the appellant's claim of abatement of duty for a particular period. The appellant, engaged in the manufacture of Sada Pan Masala, initially had their claim rejected, but a subsequent Tribunal order entitled them to a refund of duty along with interest for delayed deposit of duty. The Department then sanctioned the refund without interest, leading to an appeal seeking interest at a higher rate.

During the hearing, the appellant's counsel argued for an increase in the interest rate from 6% to 12% based on a High Court decision and a Supreme Court ruling. The Department's representative, however, contended that the prescribed interest rate was already fixed by the Department and that the Tribunals are bound by statutes, unlike the High Court and Supreme Court.

The Tribunal analyzed the issue of whether the appellant was entitled to interest on delayed refund payment at a rate of 6% or 12%. Referring to Section 11BB of the relevant statute, it was observed that interest should be paid at a rate not below 5% and not exceeding 30% per annum, as fixed by the Central Government. The Tribunal noted that the interest rate could vary within this range and that the notification relied upon could not override the statute, especially in light of the Supreme Court's direction in a similar case.

Consequently, the Tribunal held that the appellant was entitled to interest at the rate of 12% based on the statutory provisions and the Supreme Court's clarification. The order was modified accordingly, and the appeal was allowed.

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