Delayed refund interest under Section 11BB runs from the original refund application date in compounded levy cases.

Interest on a refund arising from finalisation of annual capacity under the compounded levy regime was governed by Section 11BB of the Central Excise Act, 1944, because the refund remained within the statutory refund framework on these facts. Where duty ordered to be refunded under Section 11B is not paid within three months of receipt of the refund application, delayed-refund interest becomes payable under Section 11BB. The relevant starting point for computing that period was the date of the original refund application, and not a later event linked to finalisation of capacity. Interest was therefore payable only to that extent, and the assessee succeeded on the interest claim.

---

---

Issues: Whether interest on the refund arising from finalisation of annual capacity under the compounded levy regime was payable under Section 11BB of the Central Excise Act, 1944, and whether the relevant period for computing such interest ran from the date of the original refund application.

Analysis: The refund claim arose after the annual capacity of production was finally re-determined and the refund was sanctioned on the basis of the application filed on 06.09.2010. Interest on delayed refund under Section 11BB is attracted where duty ordered to be refunded under Section 11B is not refunded within three months from the date of receipt of the application. The compounded levy regime did not take the claim outside the statutory refund framework in the present facts, and the interest question had to be governed strictly by Section 11BB. The claim for interest therefore had to be examined by taking the date of the refund application as the relevant starting point.

Conclusion: Interest was payable only in accordance with Section 11BB of the Central Excise Act, 1944, and the date of the refund application was the relevant date for computing the statutory period; the assessee succeeded to that extent.

---