Statutory interest on delayed refund runs from three months after application, but interest on interest needs express authority.

Section 11BB of the Central Excise Act provides that interest on delayed refund starts after three months from receipt of the refund application, and an appellate or court order does not shift that commencement date. Where a refund application was filed and the amount remained unpaid beyond that statutory period, statutory interest is payable from the expiry of three months. However, the Act contains no express provision for interest on delayed payment of such interest, and in the absence of a clear mandate, a claim for compound or consequential interest is not maintainable. The operative result is limited to statutory interest on the delayed refund, with the further claim rejected.

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Issues: (i) whether the appellant was entitled to interest on delayed refund under Section 11BB of the Central Excise Act, 1944 from the expiry of three months from the date of refund application, and (ii) whether interest on the delayed payment of such interest was admissible.

Issue (i): whether the appellant was entitled to interest on delayed refund under Section 11BB of the Central Excise Act, 1944 from the expiry of three months from the date of refund application.

Analysis: Section 11BB provides that interest becomes payable if the refunded duty is not returned within three months from the date of receipt of the refund application. The Explanation to the section deems an order of refund passed by an appellate authority or court as an order under Section 11B(2), but it does not postpone the starting point for interest. On the facts, the refund application was filed on 15.11.2007 and the refund amount remained unpaid beyond the statutory period, so interest had to run from the expiry of three months from that date. The contrary view in the impugned order, which linked the commencement of interest to the date of the appellate order, was not in accord with the statutory scheme.

Conclusion: the appellant was entitled to interest under Section 11BB on Rs. 49,22,148/- for the relevant delayed period.

Issue (ii): whether interest on the delayed payment of such interest was admissible.

Analysis: The Central Excise Act, 1944 contains no express provision permitting interest on delayed payment of interest. The jurisprudence relied upon by the appellant was distinguished or clarified, and the later authoritative pronouncements were treated as confirming that where the statute specifies interest, the entitlement is confined to the statutory provision. In the absence of an express statutory mandate, the Tribunal could not award interest on interest.

Conclusion: the claim for interest on interest was not maintainable.

Final Conclusion: the appeal succeeded only to the extent of statutory interest on the delayed refund amount, while the additional claim for interest on interest failed.

Ratio Decidendi: interest on refund is governed strictly by Section 11BB and runs from the expiry of three months from receipt of the refund application, but interest on delayed payment of such interest is not admissible unless the statute expressly provides for it.

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