Tribunal Doubles Interest Rate on Delayed Refund for Excisable Goods Manufacturer, Setting New Precedent.

The Tribunal resolved the dispute over the interest rate on a delayed refund in favor of the appellant, a manufacturer of excisable goods. The appellant was initially granted a refund with interest at 6% by the adjudicating authority. However, citing precedents from the Hon'ble Jurisdictional High Court, the Tribunal determined the appellant was entitled to interest at 12% per annum, effective three months after the Tribunal's order until the refund was issued. This decision aligns with established legal principles and provides a precedent for similar excise duty cases, ensuring consistency in the application of interest rates on delayed refunds.

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Issues:
Rate of interest on delayed refund sanctioned to the appellant.

Analysis:
The appellant, a manufacturer of excisable goods, was issued a show cause notice demanding excise duty, interest, and penalty. The Tribunal allowed the appeal and dropped the demand, leading the appellant to file a refund claim of &8377; 25,00,000/- along with interest. The adjudicating authority sanctioned the refund claim with interest @ 6% as per CBEC's Circular. However, the appellant sought interest @ 12% per annum. The main issue was to determine the appropriate rate of interest on the delayed refund.

The appellant relied on various legal precedents to support their contention for interest @ 12% per annum, including decisions of the Hon'ble Apex Court and the Hon'ble Jurisdictional High Court. On the other hand, the authorized representative opposed the contention, citing a decision in another case and emphasizing that the government, as the creator of law, should not exceed the provisions of the statute. The Tribunal was tasked with reconciling these arguments to reach a decision.

The Tribunal referred to the decisions of the Hon'ble Jurisdictional High Court, which directed payment of interest at different rates in similar cases. In the case of LSE Securities Ltd., interest @ 15% per annum was directed, while in the case of Shreewood Products Pvt. Ltd., interest @ 12% per annum was deemed appropriate. The Tribunal held that these decisions were binding and concluded that the appellant was entitled to interest @ 12% per annum after 3 months from the date of passing the order of the Tribunal until the refund was granted. As a result, the appeal was disposed of in favor of the appellant.

This judgment clarifies the applicable rate of interest on delayed refunds in excise duty cases, providing a clear precedent based on the decisions of the Hon'ble Jurisdictional High Court. The Tribunal's decision ensures consistency and adherence to established legal principles in determining the rate of interest in such matters.

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