2004 (2) TMI 89 - AT - Central Excise

Tribunal orders interest payment on duty refund, citing Section 11B and 11BB

The Tribunal ruled in favor of the applicant, directing the respondent to calculate and pay interest on duty refund from the date of the original refund ... Interest under Section 11BB - refund application date as triggering period for interest - Explanation to Section 11BB deeming appellate order to be order under sub-section (2) of Section 11B - calculation of interest from date of receipt of refund applicationInterest under Section 11BB - refund application date as triggering period for interest - Explanation to Section 11BB deeming appellate order to be order under sub-section (2) of Section 11B - Whether interest is payable from the date of the original refund application filed on 5-2-98 or from the date of the final order/application after the Tribunal's decision - HELD THAT: - The Tribunal held that the Explanation to Section 11BB deems an order of refund made by the Appellate Tribunal to be an order passed under sub-section (2) of Section 11B, and therefore the Tribunal's final order relates back to the date of the order under sub-section (2). Consequently, interest under Section 11BB is to be calculated from the date immediately after the expiry of three months from the date of receipt of the original refund application filed on 5-2-98 until the date of refund. The Calcutta High Court decision relied on by the respondent was distinguishable because it concerned refund of a pre-deposit and held that liability to pay interest arises only after decision by the final authority; that ratio does not apply to the present facts where the Explanation brings the appellate order within sub-section (2) for the purposes of Section 11BB.Interest is to be calculated having regard to the refund application filed on 5-2-98 and paid accordingly.Final Conclusion: The respondent is directed to calculate and pay interest in accordance with law from the period reckoned from the applicant's refund application dated 5-2-98; payment to be made within the period specified in the order and compliance reported to the Tribunal. Issues involved: Determination of the period for claiming interest on duty refund.The dispute in this case revolves around the entitlement of the applicant to claim interest on duty refund. The applicant asserts its right to interest from 5-2-98, the date of its refund application, while the respondent argues that interest should be calculated from 6-12-2001, the date of the refund application after the final order by the Tribunal. The respondent relies on a decision of the Calcutta High Court in Eastern Coils (P) Ltd. v. CCE, Kolkata [2003 (153) E.L.T. 290 (Cal.) = 2002 (51) RLT 1011] to support its stance.The applicant initially filed a refund application on 5-2-98 based on an Order-in-Original dated 31-10-97. This application was rejected as time-barred by the Asstt. Commissioner, and the appeal to the Commissioner (Appeals) was also dismissed. Subsequently, an appeal was made to the Tribunal, which on 31-10-2001, ruled that the refund application was timely and ordered the refund, which was then made on 8-4-2003.The applicant claims interest as per Section 11BB, which mandates payment of interest if duty ordered to be refunded is not repaid within three months of the application. The provision allows for interest at a rate fixed by the Central Government. The Explanation to this section clarifies that orders of refund by higher authorities are deemed to be under Section 11B for interest calculation purposes.Considering the Explanation, the Tribunal's Final Order on 6-12-2001 is deemed to relate back to the original order date under Section 11B. Therefore, the applicant is justified in seeking interest from 5-2-98. The Kolkata High Court decision cited by the respondent pertains to a different scenario involving pre-deposit refund, where interest liability arises post the final authority's decision.As a result, the Tribunal directs the respondent to calculate and pay interest in accordance with the law, considering the applicant's refund application from 5-2-98. The interest payment is to be made within one month, with compliance to be reported to the Tribunal by 26-3-2004.