Delayed refund of unutilized Cenvat credit attracts statutory interest after the three-month refund period expires.

Delayed refund of unutilized Cenvat credit under Rule 5 attracts interest under Section 11BB of the Central Excise Act, 1944 once the refund application remains unattended beyond three months from receipt. The claim was treated as a refund claim carrying the statutory consequence of delay, and the argument that accumulated credit stayed with the assessee and could not earn interest was rejected. Unutilized credit was treated as duty lying with the Revenue until actually utilized, so interest became payable from the day after expiry of the three-month period.

---

---

Issues: Whether interest was payable on delayed refund of unutilized Cenvat credit claimed under Rule 5 of the Cenvat Credit Rules, 2002.

Analysis: The refund application was filed and the Department was required to either sanction or reject it within three months. A show cause notice seeking original documents was issued just before expiry of that period, and the competent authority delayed final sanction thereafter. The refund claim under Rule 5 was treated as a refund claim attracting the statutory consequence of delay. The contention that accumulated Cenvat credit remained with the assessee and therefore no interest could arise was rejected. It was held that unutilized credit represents duty lying with the Revenue until the credit is actually utilized, and if refund is delayed beyond the prescribed period, interest follows under Section 11BB of the Central Excise Act, 1944.

Conclusion: Interest was payable from the date immediately after expiry of three months from receipt of the refund application, and the Revenue's challenge failed.

Ratio Decidendi: A delayed refund of unutilized Cenvat credit under Rule 5 attracts interest under Section 11BB of the Central Excise Act, 1944 from the day after expiry of three months from receipt of the refund application.

---