Central Excise refund interest on delayed refunds limited to statutory 6% under Section 11BB; higher 12% claim rejected

Refund claims under the Central Excise regime attract statutory refund provisions, with interest governed by the statutory rate under Section 11BB; the tribunal applied precedents (Mafatlal, Ranbaxy) to hold interest payable at the notified 6% on delayed refunds, rejecting a claim for 12%. A separate rule governs the computation date for interest on amounts deposited as a predeposit for appeal, where interest runs from the deposit date under the special deposit provision. The impugned order allowing interest at 6% was upheld and the appeal dismissed.

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Issues: Whether the appellant is entitled to interest at the rate of 12% from the date of deposit (or date of reversal) instead of interest at the rate prescribed under Section 11BB of the Central Excise Act, 1944 on the refund of Rs.35,60,087/- ordered by the Appellate Authority.

Analysis: The appeal concerns refund of amounts found to be central excise duty following the Tribunal's and appellate orders and the applicability of statutory provisions governing refunds and interest. The Court examined the nature of the amount claimed (refund of duty arising from reversal of CENVAT credit and remission under Rule 21), the scheme of Section 11B and Section 11BB of the Central Excise Act, 1944, and relevant precedents including Mafatlal Industries, Ranbaxy Laboratories, Sandvik Asia, Gujarat Fluoro Chemicals, and subsequent authorities interpreting commencement and rate of interest. The Court distinguished decisions relied upon by the appellant which related to refunds of deposits made during investigations or pre-deposits under Section 35F, noting that Section 35FF governs interest on pre-deposits and prescribes a different starting point. The statutory text, Board circulars and Supreme Court authorities establish that refund of duty under Section 11B attracts interest under Section 11BB, and that the relevant date for commencement of statutory interest is determined by Section 11BB (expiry of three months from receipt of application), with rates fixed by notification. The appellant's reliance on decisions awarding 12% on equitable grounds was found inapplicable where the statutory provision prescribes a specific regime and interest rate; consequently, decisions concerning pre-deposits or inordinate delays beyond the statutory scheme were distinguished.

Conclusion: The appellant is not entitled to interest at 12%; the refund and interest are governed by Section 11B and Section 11BB of the Central Excise Act, 1944 and the impugned allowance of interest at the rate prescribed under Section 11BB is correct. The appeal is rejected.

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