Refund interest under Section 11BB starts three months after application filing, not from refund order date

CESTAT Kolkata held that interest on delayed refund under Section 11BB of Central Excise Act commences from three months after receipt of refund application under Section 11B(1), not from the date of refund order. The tribunal clarified that "relevant date" in Section 11B pertains only to limitation periods for filing refund claims, not to interest calculation. Following Gujarat HC precedent in Kamakshi Tradexim case, the appellant was granted interest entitlement from three months post-application date. The lower authority's order was set aside and appeal allowed.

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Issues Involved:
1. Entitlement to refund claims.
2. Entitlement to interest on delayed refunds under Section 11BB of the Central Excise Act, 1944.

Summary:

Issue 1: Entitlement to Refund Claims
M/s. IOCL filed appeals challenging the orders of the learned Commissioner (Appeals) which initially rejected their refund claims for Central Excise Duty paid on the export of Naphtha and HSD. The refund claims were initially rejected by the Assistant Commissioner, but on appeal, the Commissioner (Appeals) allowed the refunds, including the cess amount. The refund claims were subsequently sanctioned by the Assistant Commissioner.

Issue 2: Entitlement to Interest on Delayed Refunds under Section 11BB of the Central Excise Act, 1944
The appellant sought interest for delayed payment of refunds, citing a delay of 1853 days and 1071 days respectively. They relied on the Supreme Court's decision in Ranbaxy Laboratories Ltd. Vs. Union of India, which held that interest under Section 11BB becomes payable from the date of expiry of three months from the date of receipt of the refund application. The Commissioner (Appeals) rejected the claim for interest, interpreting that the relevant date for interest calculation should be the date of the appellate order as per clause (ec) of Section 11B, inserted w.e.f. 11.05.2007.

Tribunal's Findings:
The Tribunal disagreed with the Commissioner (Appeals), stating that clause (ec) of Section 11B only extends the limitation period for filing a refund claim and does not affect the date from which interest under Section 11BB becomes payable. The Tribunal held that interest is payable from three months after the date of receipt of the refund application, as per the Supreme Court's ruling in Ranbaxy Laboratories Ltd.

Conclusion:
The Tribunal set aside the order of the lower authority and allowed the appeal, entitling the appellant to interest on the delayed refunds from three months after the date of their refund applications, at the rates prescribed by the government. The appeal was allowed with consequential relief as per law.

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