Appellate Tribunal awards interest to taxpayer on delayed refund, rejecting Department's protest.

The Appellate Tribunal ruled in favor of the respondent assessee, awarding interest at a rate of 12% per annum on a delayed refund of approximately Rs.78 lakh by the Department. The Tribunal held that the refund, deposited under protest and retained by the Department, should carry interest despite no cenvat credit demand or penalty claim. The Department's argument that the deposit was in anticipation of a claim for excess cenvat credit was rejected. The Tribunal's decision was upheld, directing the Department to promptly make the interest payment to avoid further legal action by the assessee.

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Issues:
The legal issue in this case revolves around whether the respondent assessee was entitled to interest on a delayed refund made by the Department, particularly in the context of excess duty or interest paid.

Summary:
The case involved a dispute where the respondent assessee was found liable to refund cenvat credit to the extent of Rs.97 lakh, out of which approximately Rs.78 lakh was determined to be refundable by the Department. The assessee contended that the refund, which was deposited under protest and retained by the Department for a considerable period, should carry interest, despite the absence of any cenvat credit demand or penalty claim. The Department refused to pay interest, citing Section 11B of the Central Excise Act, which does not provide for interest on refunds. The Appellate Tribunal, however, found in favor of the assessee, awarding interest at a rate of 12 per cent per annum.

The Department argued that the initial deposit was made in anticipation of a claim for excess cenvat credit, thus falling under the bar of Section 11B. Additionally, it contended that interest on similar refunds had been awarded at a lower rate by the Delhi High Court. The Tribunal, in its orders, reasoned that the deposit was not made on account of duty or interest, thereby justifying the award of interest. It also held that interest on interest was not relevant at that stage. The Tribunal's decisions were upheld, and the Department was directed to make the interest payment within four weeks to avoid further claims by the assessee.

In conclusion, the judgments and orders of the Appellate Tribunal were allowed to stand, with no interference deemed necessary. The Department was instructed to make the interest payment promptly to settle the matter, failing which the assessee could pursue additional legal remedies.

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