Court Entitles Interest on Delayed Excise Refund; Precedents Over Circulars; Revenue Must Release Amount

The court held that the petitioners are entitled to interest on the delayed refund of Central Excise duty under Section 11BB of the Central Excise Act, 1944. The court emphasized the binding nature of judicial precedents over departmental circulars, directing revenue authorities to release the amount due within 60 days. The decision reiterated that subordinate authorities must adhere to judicial pronouncements, disregarding conflicting executive circulars. The writ petition was allowed with no order as to costs.

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Issues Involved:
1. Eligibility for interest on delayed refund of Central Excise duty.
2. Applicability of Section 11B and 11BB of the Central Excise Act, 1944 to Notification No. 33/99-CE dated 08.07.1999.
3. Binding nature of judicial precedents and departmental circulars.

Detailed Analysis:

1. Eligibility for Interest on Delayed Refund of Central Excise Duty:

The petitioners challenged the rejection of their claim for interest on delayed refund of Central Excise duty by the Deputy Commissioner. The petitioners argued that the rejection was contrary to the law laid down by the Gauhati High Court in the case of "Amalgamated Plantations Limited," which held that interest on delayed refund is payable under Section 11BB of the Central Excise Act, 1944. The petitioners had previously been granted a refund of Rs. 39,33,061 for the period from July 1999 to February 2003, but their claim for interest on this delayed refund was rejected.

2. Applicability of Section 11B and 11BB of the Central Excise Act, 1944 to Notification No. 33/99-CE dated 08.07.1999:

The court examined the provisions of Notification No. 33/99-CE dated 08.07.1999, which provided exemptions for industrial units undergoing substantial expansion. The court noted that the petitioners had undertaken substantial expansion and were entitled to refunds as per the notification. The court referred to its previous judgment in "Amalgamated Plantations Limited," which held that Section 11B of the Central Excise Act applies to all types of excise duty refunds, including those under Notification No. 33/99-CE. The court emphasized that the language of Section 11B is clear and unambiguous, and it does not differentiate between different types of excise duty refunds.

3. Binding Nature of Judicial Precedents and Departmental Circulars:

The court addressed the issue of whether departmental circulars can override judicial precedents. The respondents argued that the CBEC Circular No. 842/19/2006-CX dated 08.12.2006, which stated that Section 11B does not apply to refunds under Notification No. 33/99-CE, should be followed. However, the court held that executive circulars cannot override statutory provisions or judicial interpretations. The court cited several judgments, including "Kamalakshi Finance Corporation Ltd." and "Hindustan Aeronautics Ltd.," to emphasize that judicial pronouncements by higher courts are binding on subordinate authorities and cannot be disregarded based on departmental circulars.

Conclusion:

The court concluded that the petitioners are entitled to interest on the delayed refund of Central Excise duty. The court set aside the impugned order dated 31.12.2018 and directed the revenue authorities to examine the claim for interest on the delayed refund and release the amount due within 60 days. The court reiterated that judicial precedents must be followed unreservedly by subordinate authorities, and departmental circulars cannot contravene the law declared by higher courts. The writ petition was allowed with no order as to costs.

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