Tribunal Grants Interest on Refund per Section 11BB, Citing RANBAXY LABORATORIES Precedent

The tribunal allowed the appeal, citing the precedent set by the Hon'ble Apex Court in the RANBAXY LABORATORIES case, and set aside the order denying interest on the refund granted to the appellant. The tribunal emphasized that interest under Section 11BB becomes payable after three months from the refund application date, regardless of subsequent disputes, and distinguished earlier decisions cited by the AR.

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Issues involved:
- Denial of interest on refund granted to the appellant

Analysis:
The appeal was filed against the denial of interest on a refund granted to the appellant. The appellant had a dispute with audit regarding the admissibility of credit of SED paid on inputs received from EOU. The appellant reversed the credit due to audit objections. Subsequently, the appellant sought a refund of the credit, which was initially sought on 5th August, 2011. A show cause notice was issued seeking to reject the refund on the grounds of inadmissibility. The matter was settled in the appellant's favor by an Order-In-Original dated 30th August, 2019. However, the refund was granted without interest. The appellant challenged this decision before the Commissioner (Appeals), who held that since the refund was granted within three months from 30th August, 2019, no interest was admissible. The appellant then approached the tribunal, citing various legal precedents to support their claim.

The appellant relied on decisions such as RANBAXY LABORATORIES, HAMDARD LABORATORIES, TATA CHEMICALS, and others to argue for the entitlement to interest on the refund. On the other hand, the AR argued that interest became admissible only after the order relating to the credit's admissibility was passed and the refund was granted within three months of that period. The AR cited decisions like PEARL POLYMERS LTD and others to support this position.

The tribunal considered the arguments presented and referred to the decision of the Hon'ble Apex Court in the case of RANBAXY LABORATORIES. The court emphasized that interest under Section 11BB becomes payable after three months from the date of the refund application, regardless of any subsequent disputes. The tribunal noted that the decisions cited by the AR were passed before the RANBAXY LABORATORIES case and therefore were not applicable in this context. Consequently, the tribunal allowed the appeal, following the precedent set by the Hon'ble Apex Court in the RANBAXY LABORATORIES case, and set aside the impugned order.

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