2025 (11) TMI 1861 - AT - Central Excise

Refunds Allowed Despite Wrong Notification Cited; Authority Directed to Grant Interest at 6% Under Notifications 20/2007-CE, 56/2003-CE

M/s. Sun Pharma Laboratories Limited Versus Commissioner of C.G.S.T. and Central Excise, Siliguri

CESTAT Kolkata allowed the appeal, setting aside the impugned order rejecting refund claims filed between February 2016 and January 2017. It held that ... Non-grant of refund claim - refund not granted on the ground that the they have cited N/N. 56/2003-C.E. dated 25.06.2003 when during the period under consideration the effective Notification was N/N. 20/2007-C.E. dated 25.04.2007 - HELD THAT:- The appellant has filed the refund claims between February 2016 and January 2017. After prolonged litigation, under both Orders-in-Original as well as Order-in-Appeal, their refund claims were rejected. Only at the Tribunal level now, the appellant is getting the relief. For the delayed refund, interest is payable after expiry of three months from the date of filing of the refund claims. In the present case, the adjudicating authority is directed to grant the refunds along with interest at the rate of 6%, calculating the same as payable immediately after three months from the original date of filing of the refund claims. Since the refunds pertain to the period 2016-17, the adjudicating authority is directed to process the refund applications and grant the same expeditiously, within a period of eight weeks from the date of receipt of this Order. The impugned order is set aside - appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether refund claims, otherwise fully admissible under Notification No. 20/2007-C.E., can be rejected solely on the ground that the assessee inadvertently mentioned Notification No. 56/2003-C.E. in the refund applications. 1.2 Whether, upon allowing such refund claims at the appellate stage, the assessee is entitled to interest on delayed refund, the applicable rate, and the period from which such interest is payable. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Effect of wrong notification number in refund claim where substantive eligibility under correct notification is undisputed Legal framework (as discussed) 2.1 The Tribunal examined the scope and conditions of Notification No. 56/2003-C.E. dated 25.06.2003 and Notification No. 20/2007-C.E. dated 25.04.2007, including their parallel provisions, the eligibility periods for units based on commencement of commercial production, and the common industrial policy background. 2.2 The Tribunal relied on its earlier Final Order No. 77613 of 2025 in the assessee's own case, which had already compared the two notifications in detail and held that they are substantively identical in conditions and benefits, differing only in the time window for eligible units. 2.3 The Tribunal referred to precedents, including the decisions in Share Medical Care v. Union of India, R.S. Infraprojects (P) Ltd., Packaging India (P) Ltd., and Tata Consulting Engineers, on the principle that benefits cannot be denied merely due to incorrect or omitted citation of a notification when substantive eligibility is satisfied. Interpretation and reasoning 2.4 The Tribunal noted its prior finding that Notification No. 20/2007-C.E. was issued to continue the benefit earlier granted under Notification No. 56/2003-C.E., with the same scheme of exemption based on value addition and the same structure of conditions and tables; the only material distinction is the different period of commencement of commercial production for eligible units. 2.5 It was reiterated that both notifications were similarly amended in 2008 to curtail benefits, further evidencing that the legislative intent and nature of the benefits under both notifications are the same, and there is no revenue loss or adverse effect depending on which of the two is invoked by an otherwise eligible assessee. 2.6 The Tribunal recorded that the assessee had, in fact, complied with all the provisions of Notification No. 20/2007-C.E. for the relevant period, and the Revenue had not disputed this substantive eligibility. It also noted that from September 2015 onwards the assessee had correctly filed refunds under Notification No. 20/2007-C.E., and those claims had been sanctioned, demonstrating that eligibility to Notification No. 20/2007-C.E. for the broader period (December 2012 to January 2017) was not in dispute. 2.7 On these facts, the Tribunal characterized the mentioning of Notification No. 56/2003-C.E. instead of Notification No. 20/2007-C.E. in the refund applications as a mere 'inadvertent' or 'clerical and technical' error, which cannot, in law, disentitle the assessee from a benefit otherwise available under the correct notification. 2.8 By applying the ratio of Share Medical Care, the Tribunal held that even if an assessee does not initially claim benefit under the correct notification, it is not barred or estopped from claiming such benefit later, provided the conditions of that notification are satisfied. The focus must be on substantive eligibility, not on formal or technical lapses in description. 2.9 The Tribunal further relied on the line of authority (R.S. Infraprojects, Packaging India, Tata Consulting Engineers) holding that (a) rectification of the notification number in a claim is permissible where eligibility is undisputed; (b) a mistaken declaration under a wrong notification does not defeat entitlement under the correct one; and (c) a benefit cannot be refused merely because the supplier or claimant cited an incorrect notification if the use and eligibility conditions under the correct notification stand satisfied. 2.10 The Tribunal concluded that the present appeals were on all fours with its earlier final order in the assessee's own case, save that in the earlier matter the dispute concerned recovery of already-sanctioned refunds, whereas here the refunds were denied at the outset; in both situations, however, the Revenue's objection was confined to the wrong notification number and not to substantive ineligibility. Conclusions 2.11 The Tribunal held that the wrong mention of Notification No. 56/2003-C.E. in the refund claims, when the assessee was substantively eligible and compliant under Notification No. 20/2007-C.E., cannot be a valid ground to reject the refund claims. 2.12 Following its own earlier Final Order No. 77613 of 2025 and the cited judicial precedents, the Tribunal set aside the impugned Order-in-Appeal and Orders-in-Original and allowed the refund claims with consequential relief. Issue 2 - Entitlement to interest on delayed refund and directions for expeditious grant Interpretation and reasoning 2.13 The Tribunal noted that the refund claims related to the period from February 2016 to January 2017 and that, despite prolonged litigation and successive rejections by the adjudicating authority and the appellate authority, the assessee secured relief only at the Tribunal stage. 2.14 Recognising that refunds were withheld beyond the statutorily reasonable period after filing of the claims, the Tribunal held that interest becomes payable on such delayed refunds after the expiry of three months from the original date of filing of the refund applications. Conclusions 2.15 The Tribunal directed the adjudicating authority to grant the sanctioned refund amounts along with interest at the rate of 6%, such interest to be calculated from the date immediately after three months from the original date of filing of each refund claim until the date of actual payment. 2.16 Considering that the refunds pertain to 2016-2017, the Tribunal further directed the adjudicating authority to process the refund applications and release the refund amounts with interest expeditiously, within eight weeks from the date of receipt of the Tribunal's order.