Order to Pay Interest on Excise Duty Refund from 3 Months After Section 11BB Start Date Until Actual Payment.

The HC directed the respondents to pay interest on the refund of excess Excise Duty from three months after Section 11BB's commencement date (26-5-1995) until the actual payment date. The interest rate will follow the Board's notifications. Compliance is required within two months from the order's receipt, with no costs awarded.

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Issues Involved:
1. Claim of interest on the refund of excess Excise Duty.
2. Application of Section 11B and Section 11BB of the Central Excise Act, 1944.
3. Determination of the relevant date for the commencement of interest liability.
4. Constitutional validity of Section 11B of the Central Excise Act, 1944.

Summary:

1. Claim of Interest on Refund of Excess Excise Duty:
The petitioner sought interest on the refund of Excise Duty paid in excess, which was ultimately found to be refundable and not liable to be transferred to the Consumer Welfare Fund u/s 11B(2) of the Central Excise Act, 1944. The initial applications for refund were made on 3-1-1989 and 21-4-1989, claiming entitlement to a rebate as a 'new industrial undertaking' under Notification No. 36/87. Despite favorable decisions from the Commissioner (Appeals) and CEGAT, the refund was delayed, leading to the current petition for interest on the delayed refund.

2. Application of Section 11B and Section 11BB of the Central Excise Act, 1944:
The petitioner argued that u/s 11B read with Section 11BB, the refund application was made within one year of the date of payment of Duty, and since the refund was not made within three months, interest was due from the expiry of three months from the date of application. The respondents contended that the refund became due only after the CEGAT's order, and interest was payable only for the delay beyond three months from that date.

3. Determination of the Relevant Date for Commencement of Interest Liability:
The court held that the relevant date for determining interest liability is the date of the application for refund, not the date of the final adjudication. The liability to pay interest arises if the refund is not made within three months from the date of the application, as per Section 11BB. The court emphasized that the statutory provisions of Section 11BB, inserted by the Finance Act of 1995, provide a clear basis for interest on delayed refunds.

4. Constitutional Validity of Section 11B of the Central Excise Act, 1944:
The challenge to the constitutional validity of Section 11B was given up during the hearing. The court noted that the insertion of Section 11BB has made a vital difference by providing a statutory basis for imposing liability to pay interest on delayed refunds.

Conclusion:
The court directed the respondents to pay interest on the refund amount from the expiry of three months from the date Section 11BB came into force (26-5-1995) until the date of actual payment. The interest rate shall be as notified by the Board from time to time. The order is to be complied with within two months from the date of receipt of the writ or submission of a certified copy of the order. There shall be no order as to costs.

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