2004 (6) TMI 53 - AT - Central Excise

CESTAT directs Revenue to pay interest on refund; clarifies payment period & issues timeframe for calculation

The Appellate Tribunal CESTAT, New Delhi addressed the issue of non-payment of interest on a refund amount, directing the Revenue authorities to pay ... Interest under Section 11BB commencing after expiry of three months from receipt of refund application - computation of interest where refund is allowed by appellate order - entitlement to interest for entire period until date of refundInterest under Section 11BB commencing after expiry of three months from receipt of refund application - computation of interest where refund is allowed by appellate order - Interest on the refund is payable from the date immediately after the expiry of three months from the date of receipt of the refund application until the date of refund, even where the refund is granted pursuant to an appellate order. - HELD THAT: - The Tribunal examined Section 11BB and the Explanation thereto and held that the statutory period for payment of interest runs from the expiry of three months from the receipt of the refund application until the date of refund. That period is not shortened or altered when the refund is initially rejected by the Assistant Collector and later allowed by an appellate authority. The Tribunal found no justification for the Revenue limiting interest to the period after its Final Order; the law mandates payment for the full statutory period. Given the appellant's successful refund claim on appeal, interest must therefore be calculated for the entire period prescribed by Section 11BB counted from receipt of the refund application until the date of actual refund, and the interest amount must be correctly computed and paid without further delay.Directed that interest be paid for the full period from the date immediately after the expiry of three months from receipt of the refund application until the date of refund, and that the interest amount be calculated correctly and paid within two weeks from receipt of this order.Final Conclusion: The Tribunal allowed the claim for interest under Section 11BB for the entire statutory period (from expiry of three months after receipt of the refund application until date of refund) even though the refund was allowed on appeal, and directed correct computation and payment within two weeks. Issues involved: Non-payment of interest on the refund amount.The Appellate Tribunal CESTAT, New Delhi addressed the outstanding issue of non-payment of interest on the refund amount. The Tribunal had initially allowed the refund application, which had been rejected on the ground of time bar. The appellant complained that the order was not being implemented correctly, leading to the Tribunal passing a further direction for the respondents to pay interest to the appellant in accordance with the rules.The appellant contended that the interest paid was only for the delay after the passing of the Final Order, while Section 11BB of the Central Excise Act mandated interest to be paid from the date immediately after the expiry of three months from the date of receipt of the application till the date of refund. The appellant argued that they were entitled to interest from the date of expiry of three months from the receipt of their refund application.Upon reviewing the submissions from both sides, the Tribunal observed that the period for interest payment is clearly defined in Section 11BB of the Central Excise Act. The period starts from the expiry of three months from the receipt of the refund application and continues until the date of refund, irrespective of whether the refund application was initially rejected by the Assistant Commissioner and later sanctioned by an appellate authority. The Tribunal directed the Revenue authorities to pay interest for the full period as stipulated in Section 11BB, emphasizing that the interest amount should be calculated correctly and paid to the appellant within two weeks from the date of receipt of the order.