Appellants entitled to interest under Section 11BB for delayed refund, revenue appeal dismissed

The Commissioner (Appeals) held that the appellants were entitled to interest under Section 11BB as the refund application was filed before the introduction of the section, and the refund was granted after the interest-free period of three months. The delay in refund made the department liable to pay interest under Section 11BB, including Modvat credit refunds, as per Section 11B(2) of the Act. The revenue's appeal was dismissed for lack of merit.

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Issues involved: Refund of amount under Section 11B, entitlement to interest under Section 11BB, applicability of interest on Modvat credit refund.

Summary:
1. The revenue appealed against the denial of interest on a refund granted to the respondents under RG 23A Part-II. The Commissioner (Appeals) held that the appellants were entitled to interest under Section 11BB as the refund application was filed before the introduction of the section, and the refund was granted after the interest-free period of three months.

2. The revenue contended that since the refundability of the amount was in dispute and the matter was remanded by the High Court, interest under Section 11BB was not applicable. However, the Commissioner found the revenue's submissions baseless, emphasizing that the refund order had not been challenged, making the grant of refund final. The delay in refund made the department liable to pay interest under Section 11BB.

3. The revenue argued that interest should only apply to duty refunds, not Modvat credit refunds. However, Section 11B(2) of the Act explicitly includes refunds of Modvat credit, regardless of the form of payment. As Section 11BB applies to all refunds under Section 11B, including Modvat amounts, the revenue's appeal was dismissed for lack of merit.

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