2021 (3) TMI 790 - AT - Central Excise

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 ... Rate of interest on delayed tax refund - entitlement to interest under section 11BB of Central Excise Act, 1944 - exclusion of initial three months before payment of interest - binding effect of jurisdictional High Court precedentsRate of interest on delayed tax refund - entitlement to interest under section 11BB of Central Excise Act, 1944 - binding effect of jurisdictional High Court precedents - exclusion of initial three months before payment of interest - The rate and period for payment of interest on the pre-deposit/refund sanctioned to the appellant. - HELD THAT: - The Tribunal held that, in view of binding decisions of the Punjab & Haryana High Court referred to by the appellant, the appellant is entitled to interest at 12% per annum under the statutory scheme embodied in section 11BB of the Central Excise Act, 1944. The Tribunal applied the principle that jurisdictional High Court precedents are binding on the bench and followed the decisions which awarded interest at the stated rate after excluding the initial three months following the Tribunal's order. Accordingly, interest at 12% per annum is directed to run from three months after the Tribunal's order dated 19.12.2019 until the date the refund is granted. [Paras 6]Appeal allowed in part; interest to be paid at 12% per annum from three months after 19.12.2019 until refund is granted.Final Conclusion: The appeal is disposed of by directing payment of interest at 12% per annum on the sanctioned refund, calculated from three months after the Tribunal's order dated 19.12.2019 until actual payment. 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.