Delayed refund interest under Central Excise law runs from three months after the original claim, not the later refund order.

Interest on delayed refund under section 11BB of the Central Excise Act, 1944 becomes payable if the sanctioned refund is not paid within three months from receipt of the refund application under section 11B, and not from the date of the refund order. Where a refund dispute arose from provisional assessment and the earlier remand had required finalization of assessment with consequential refund and interest, the original refund claim remained the operative application. The later fresh claim did not displace that foundation, so restricting interest only from the later application date was inconsistent with the statute and the remand directions. Full consequential interest was therefore payable.

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Issues: Entitlement to interest under section 11BB of the Central Excise Act, 1944 on delayed refund, and the date from which such interest becomes payable where the refund dispute arose out of provisional assessment and the refund claim was finally sanctioned after remand.

Analysis: Section 11BB provides that interest becomes payable if the duty ordered to be refunded is not refunded within three months from the date of receipt of the refund application under section 11B. The legal position applied was that the liability to pay interest commences on expiry of three months from the date of receipt of the refund application and not from the date of the refund order. In the present case, the refund proceedings originated from the original refund claim filed on 30.04.2010, and the earlier remand directions had required finalization of assessment and grant of consequential refund and interest. The subsequent fresh claim filed after finalization of assessment did not displace the earlier claim as the foundation of the dispute. The impugned order limiting interest only from the later application date was therefore inconsistent with the statutory mandate and the earlier remand directions.

Conclusion: Interest under section 11BB was payable from the date three months after the original refund claim, and the assessee was entitled to the full consequential interest claimed. The partial restriction of interest was unsustainable.

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