Section 11BB interest accrues from 3 months after refund application receipt, not from appellate order date

The HC held that interest under Section 11BB of the Central Excise Act, 1944 accrues from the expiry of 3 months from the date of receipt of refund application, not from the date of appellate order. Following SC precedents in Ranbaxy Laboratories and Manisha Pharmo Plast cases, the court directed revenue to calculate statutory interest from 3 months after the refund application date until actual refund grant. The respondents were ordered to pay calculated interest within 4 months. Petition disposed of.

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Issues:
The judgment addresses the issue of whether interest under Section 11BB of the Central Excise Act accrues from the date of expiry of 3 months from the date of receipt of the application for refund or from the date of communication of the order of the Appellate authority/Court.

Brief Facts:
The petitioner, engaged in manufacturing Poly-Isobutylene, claimed a refund for duty paid on gas returned as unused/excess quantity. The claim was rejected for a period, but later granted for another period. The matter went through appeals and was finally affirmed by the High Court. The question arose regarding the accrual of interest on the refund amount.

Petitioner's Argument:
The petitioner contended that interest should start accruing from the date of the application for refund, not from the date of the order of the adjudicating authority/Court. Citing a Supreme Court judgment, the petitioner argued that interest on delayed refunds is governed by Section 11BB of the Act, not Section 35FF.

Respondent's Argument:
The respondents argued that interest accrues only after 3 months from the final adjudication by the High Court, relying on Section 35F and 35FF. They emphasized that the order passed by the High Court is deemed to be under Section 11B of the Act.

Court's Analysis:
The Court referred to the Supreme Court judgment in Ranbaxy Laboratories Ltd. v. Union of India, which clarified that interest accrues under Section 11BB from the date of receipt of the application for refund. The Court rejected the respondent's reliance on the Explanation to Section 11BB, stating that interest accrues automatically after 3 months from the date of application.

Conclusion:
Based on the Supreme Court's interpretation and subsequent judgments, the Court held that interest on refund accrues in case of delay beyond 3 months from the date of the refund application. The respondents were directed to calculate and pay the statutory interest within a specified timeframe. The writ petition was disposed of with no costs.

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