Refund and interest under excise law cannot be denied on a territorial banking objection; delay interest runs from the application date.
Refund of duty deposited during investigation could not be denied on a purely territorial banking objection where the deposit was undisputed and the challan was verified; the place of deposit through a Delhi bank did not change the character of the duty or justify rejection of the claim, so the refund was upheld. Interest under Section 11BB of the Central Excise Act, 1944 was payable from three months after receipt of the refund application, because once refund is ultimately sanctioned, including in appeal, the statutory period runs from the original application date and is not postponed by the earlier rejection.
Issues: (i) Whether refund of duty deposited during investigation could be rejected merely because the deposit was made in a bank at Delhi and not in the bank of the Ghaziabad jurisdiction; (ii) Whether interest under Section 11BB of the Central Excise Act, 1944 was payable from three months after receipt of the refund application even though the refund was initially rejected and later sanctioned in appeal.
Issue (i): Whether refund of duty deposited during investigation could be rejected merely because the deposit was made in a bank at Delhi and not in the bank of the Ghaziabad jurisdiction.
Analysis: The refund claim was filed in the prescribed form under Rule 173S of the Central Excise Rules, 1944. The deposit of Rs. 50 lakhs was not disputed, and the departmental correspondence confirmed the challan verification. The fact that the amount was deposited through a Delhi bank or by the registered office at Delhi did not alter the character of the deposit or justify denial of refund, since the duty ultimately goes into the Consolidated Fund of India and refund is to be made from the same fund. The jurisdictional objection was therefore not a valid ground to refuse the claim.
Conclusion: The refund was rightly allowed, and the Revenue's challenge failed.
Issue (ii): Whether interest under Section 11BB of the Central Excise Act, 1944 was payable from three months after receipt of the refund application even though the refund was initially rejected and later sanctioned in appeal.
Analysis: Section 11BB links interest to delay in granting refund after receipt of the application under Section 11B. Once the refund is ultimately ordered to be paid, whether by the original authority or by the appellate authority, the period for interest is computed from the date of receipt of the refund application. The subsequent appellate sanction does not postpone the accrual of interest where the refund was not granted within the statutory period.
Conclusion: Interest was payable to the assessee after the expiry of three months from the date of the refund application till the date of actual refund.
Final Conclusion: The Revenue's appeal against refund was rejected, and the assessee's appeal for interest was allowed, resulting in confirmation of the refund and grant of interest on the delayed refund.
Ratio Decidendi: A refund claim under Section 11B of the Central Excise Act, 1944 cannot be denied on a purely territorial banking objection when the deposit is undisputed, and interest under Section 11BB becomes payable from three months after receipt of the refund application once refund is ultimately ordered, even by the appellate authority.
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