2026 (1) TMI 1440 - AT - Central Excise

Interest on delayed rebate of excise duty: higher interest awarded for abnormal delay, claimant entitled to 12%.

Discussion of interest liability on delayed rebate of excise duty concludes that statutory interest begins after expiry of the three-month period from ... Interest on delayed refund/rebate of excise duty - abnormal/inordinate delay in sanction of rebate/refund - Unjust enrichment - equitable relief and compensation for wrongful withholding - Article 300A of the Constitution of India - Whether interest at higher rate is liable to be paid on the amount of rebate claims sanctioned after a delay of 12 years in accordance with the provisions of Section 11BB of the Central Excise Act, 1944 or otherwise. - HELD THAT:- It is pertinent to discuss that the provisions of Section 11B of the Central Excise Act, 1944 is equally applicable relating to rebate of duty of excise as per Explanation ‘A’ to the said section. I find that under Section 11BB interest is required to be paid from the expiry of 3 months period from the date of application for rebate of duty. In this case payment of interest under Section 11B of the Central Excise Act, 1944 @6% is not justified as there is abnormal delay of more than 12 years in sanctioning due rebate claim. In series of judgments, it has already been held that if there is abnormal delay in sanctioning rebate/refund claim, interest at higher rate is required to be paid. In this context, reference is made to the decision of Hon’ble Delhi High Court in the case of Surinder Singh [2006 (11) TMI 12 - HIGH COURT, DELHI] which was subsequently upheld by the Hon’ble Supreme Court vide decision reported as [2016 (10) TMI 566 - SUPREME COURT]. In this decision it has been categorically held that petitioner is entitled to @12% interest for the delayed refund of the Central Excise duty. In this case delay of rebate was for the period of 11.06.1999 to 12.06.2003. The ratio of the above decision is squarely applicable in the present case also and accordingly the Appellant is entitled to interest @ 12% on the sanctioned amount of rebate claim amounting to Rs.2,38,88,596/-. Appeal filed by the Appellant is allowed with consequential relief. Issues: Whether interest at a higher rate than 6% (specifically 12%) is payable to the appellant on sanctioned rebate/refund amounts withheld for an abnormal delay of over 12 years, and if so, the rate and period for which such interest is payable.Analysis: The Tribunal examined applicability of Section 11BB (and related provisions) of the Central Excise Act, 1944 concerning payment of interest on delayed refunds and considered authorities recognising entitlement to higher interest where refunds are unreasonably delayed. The Tribunal noted that Section 11BB provides for interest where duty ordered to be refunded is not refunded within three months, but that judicial decisions (including Supreme Court and various High Courts) have awarded higher interest rates (commonly 12%) in cases of long and unjustified withholding of refunds. The Tribunal reviewed prior decisions of this Tribunal and the Apex Court (including Surinder Singh / subsequent Supreme Court authority, Sandvik Asia Ltd., and ITC Ltd.) and relevant government notifications fixing interest rates under different sections; it considered that in cases of abnormal delay and where the appellant suffered hardship, equitable considerations and precedent support awarding interest at 12% per annum. Having regard to the facts of extraordinary delay (over 12 years), the pattern of judicial decisions, and applicable statutory notifications, the Tribunal concluded that interest at 12% per annum is appropriate for the period for which the amount was withheld.Conclusion: The appellant is entitled to interest at the rate of 12% per annum on the sanctioned rebate/refund amount for the period specified under Section 11BB of the Central Excise Act, 1944; this conclusion is in favour of the assessee.