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Issues: Whether interest under Section 11BB of the Central Excise Act, 1944 is payable on refund of accumulated Modvat/Cenvat credit granted under Rule 5 of the Cenvat Credit Rules, 2002 when the refund is sanctioned beyond three months.
Analysis: The refund claims were allowed under Rule 5, and the notification issued under that rule governed only the procedure for filing and processing such claims. Once the refund was sanctioned, the procedural notification stood exhausted. Rule 5 did not deal with interest, but Section 11BB provides for interest on any refund delayed beyond three months from the date of claim. The refunded amounts were ordered under Section 11B(2), and the Board's circular clarified that Section 11BB applies automatically to any refund sanctioned after the prescribed period. The contrary view was treated as per incuriam for not considering Sections 11B and 11BB and the relevant circular.
Conclusion: Interest under Section 11BB was payable on the delayed refund of input duty credit, and the assessee succeeded.
Ratio Decidendi: Where refund of duty credit is granted under Rule 5 of the Cenvat Credit Rules, 2002 and is sanctioned beyond the statutory period, Section 11BB of the Central Excise Act, 1944 applies to award interest on the delayed refund.
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