Central Excise refund interest rate limited to 6% per annum under Section 11BB despite appellant's 12% claim

CESTAT New Delhi dismissed appellant's claim for 12% interest on delayed refunds under Central Excise Act, 1944. The tribunal held that interest rate is restricted to 6% per annum as per Notification 67/2003-CE issued under Section 11BB, which validly fixes interest rates within the statutory range of 5-30%. The decision was supported by precedents from Madras HC and Karnataka HC. The tribunal rejected appellant's contention that the order exceeded the show cause notice scope, affirming that the 6% rate applies to delayed refund payments.

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Issues:
Rate of interest on delayed refunds - Whether 12% or 6% as per Section 11BB and Notification No.67/2003-CE (N.T.)

The Appellate Tribunal CESTAT NEW DELHI heard two appeals filed by M/s.Dinesh Tobacco Industries Ltd. challenging the order-in-appeal affirming interest on the refund amount at 6% instead of 12%. The appellant, engaged in the manufacture of Pan Masala and Gutkha, filed a refund application for central excise duty paid under a compounded levy scheme on exported goods. The Tribunal remanded the matter, and the Competent Authority later allowed the refund application but denied interest, stating it was sanctioned within the 3-month period. The appellant claimed interest from 01.11.2009 to 05.09.2017. The Adjudicating Authority rejected the interest claim of Rs.2,65,54,112, leading to the present appeals before the Tribunal.

During the hearing, the appellant's counsel argued for interest at 12% based on Supreme Court and High Court decisions, contending that the amount was a revenue deposit, not duty, so Section 11BB did not apply. The counsel referenced a Tribunal decision allowing 12% interest on similar grounds. The respondent's Authorized Representative supported the lower authorities' findings, citing Notification No.67/2003-CE (N.T.) restricting interest to 6% for delayed refunds. The Representative also relied on High Court decisions followed by a recent Tribunal judgment.

The main issue was whether the interest rate on delayed refunds should be 12% as claimed by the appellant or 6% per Notification No.67/2003-CE (N.T.). The Tribunal referenced High Court judgments affirming the applicability of the notification, which reduced the interest rate to 6% under Section 11BB of the Central Excise Act. The Tribunal rejected the appellant's arguments, stating that the notification's validity under Section 11BB justified the 6% interest rate. The Tribunal upheld the lower authorities' decisions, dismissing the appeals and allowing the miscellaneous applications.

In conclusion, the Tribunal affirmed the interest rate at 6% for delayed refunds, rejecting the appellant's claim for 12% interest. The Tribunal held that the notification validly issued under Section 11BB governed the interest rate, and the appellant's misinterpretation of earlier decisions did not warrant the higher rate. The Tribunal found no grounds to interfere with the lower authorities' orders, ultimately dismissing the appeals and allowing the miscellaneous applications.

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