Interest on refund claim calculated from original application date, not revised claim date.

The Tribunal ruled that interest on a refund claim should be calculated from the date of the original refund application, not the revised claim date or credit reversal date, in accordance with Section 11BB of the Central Excise Act, 1944. The appellant's appeal was allowed, setting aside the decision that interest should be calculated from a later date.

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Issues Involved:
1. Eligibility for interest on the refund claim.
2. Relevant date for calculating interest on the refund.

Summary:

Issue 1: Eligibility for Interest on the Refund Claim

The appellants filed a refund claim of Rs. 3,00,97,192/- on 05/10/2018 following a Tribunal order allowing their appeal related to electricity wheeled to sister units. They requested the department to adjust the amount payable against the refund due. The department returned the claim on 28/01/2019, demanding interest on the reversed credit. The appellant paid the interest on 15/05/2019 and resubmitted the claim. The adjudicating authority sanctioned Rs. 2,09,80,128/- but rejected Rs. 1,74,88,805/- claimed towards interest. The Commissioner (Appeals) held that interest was applicable only after three months from 21/05/2019, the date of the revised claim. The appellant contested this decision, asserting that interest should be calculated from the original date of duty deposit.

Issue 2: Relevant Date for Calculating Interest on the Refund

The Tribunal considered the relevant date for calculating interest due to delay in refund payment. The appellant argued that interest should be calculated from 15/04/2005, the date of CENVAT credit reversal. The Tribunal referred to Section 11BB of the Central Excise Act, 1944, which mandates interest if the refund is not made within three months from the date of application. The Tribunal cited the Supreme Court's judgment in Ranbaxy Laboratories Ltd. Vs UOI, which clarified that interest is payable from three months after the receipt of the refund application. The Tribunal concluded that the relevant date for interest calculation is three months from 05/10/2018, the date of the original refund application, and not from the revised claim date or the date of credit reversal.

Conclusion

The Tribunal set aside the impugned order, ruling that the relevant date for calculating interest is three months from the date of the original refund application (05/10/2018) as per Section 11BB of the Central Excise Act, 1944. The appeal was disposed of accordingly.

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