Statutory interest on delayed central excise refunds applies after Section 11BB begins, but earlier equitable claims fail.

Interest on delayed refund of Modvat credit was held not maintainable in writ jurisdiction for the period before Section 11BB of the Central Excise Act, 1944 came into force, because no statutory right supported the claim. For the post-commencement period, Section 11BB created a statutory entitlement to interest on delayed refund once the refund remained unpaid beyond the prescribed period. The refund claim remained subject to Section 11B procedure, and interest became payable at the notified rate until actual payment. The claim for earlier interest was rejected, while statutory interest for the later period was allowed.

---

---

Issues: (i) Whether interest on the delayed refund of Modvat credit for the period prior to the commencement of Section 11BB of the Central Excise Act, 1944 could be claimed in writ jurisdiction on general principles; (ii) whether interest was payable under Section 11BB of the Central Excise Act, 1944 for the period after that provision came into force until the refund was made.

Issue (i): Whether interest on the delayed refund of Modvat credit for the period prior to the commencement of Section 11BB of the Central Excise Act, 1944 could be claimed in writ jurisdiction on general principles.

Analysis: The claim for the earlier period was not founded on any statutory provision. The Court relied on the principle that a writ petition directly seeking interest on delayed refund is not maintainable when the claim is based only on general equitable considerations and not on an enforceable statutory right. The existence of an earlier claim for Modvat credit did not change the position, because the demand for interest for that period remained outside the statutory scheme.

Conclusion: The claim for interest for the period before the commencement of Section 11BB was held to be not maintainable and was rejected.

Issue (ii): Whether interest was payable under Section 11BB of the Central Excise Act, 1944 for the period after that provision came into force until the refund was made.

Analysis: Section 11BB created a statutory entitlement to interest on delayed refund after its commencement. The Court held that refund claims connected with Modvat credit were governed by the refund procedure and limitation under Section 11B, and once the refund remained unpaid after the statutory period, interest became payable under Section 11BB at the notified rate. The Court therefore accepted the statutory basis for interest from the date the provision became operative until actual payment of the refunded amount.

Conclusion: Interest under Section 11BB was held payable for the post-commencement period until payment of the refunded amount.

Final Conclusion: The petition succeeded only to the extent of statutory interest for the post-Section 11BB period, while the claim for earlier interest was denied.

Ratio Decidendi: A claim for interest on delayed refund is maintainable in writ jurisdiction only when supported by a statutory right, and for periods covered by Section 11BB of the Central Excise Act, 1944, interest on delayed refund becomes payable in accordance with that provision.

---