2007 (3) TMI 526

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....ent of interest on account of delayed payment of refund. 3. Shri V.J. Sankaram, the learned Advocate who appeared on behalf of the appellants, narrated the chronology of events in both these appeals. E/709/2005 : 4. The appellants availed Modvat credit on Teflon Coated Glass Belt for Rs. 5,13,606.66. Proceedings were initiated for denying the said credit. The Assistant Commissioner ordered reversal of the credit on 31-1-1996. The appellant deposited the amount on 30-7-1996. On appeal, the Commissioner (Appeals), in his order dated 4-12-1997, remanded the matter to the Assistant Commissioner. Consequently, the appellant filed refund claim on 22-5-1998 for return of pre-deposit of the amount paid on 30-7-1996. The Assistant....

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....at Teflon Coated Glass Belt is not entitled for Modvat credit under Rule 57Q. Thus, for the period from 4-12-1997 to 22-3-1999, the amount of Rs. 5,13,606.66 has been illegally held by the department even though the Commissioner (Appeals) set aside the Assistant Commissioner's order on 4-12-1997. Hence, the appellant is entitled for appropriate interest for this period. Later events show that the refund of the amount was granted consequent to the CEGAT's order dated 28-9-2004. The appellant filed a refund claim on 28-10-2004 and the refund was granted on 27-1-2005. Therefore, there is actually no delay in sanctioning the refund amount consequent to the claim of the appellant. It was actually sanctioned within three months from the date of f....

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....f events, we find that the appellants' claim for refund was being rejected on technical grounds. For example, on 26-4-1996, Show Cause Notice was issued on the ground that the assessee had not withdrawn earlier declaration filed under Rule 57G. The ground for rejection is purely technical because even on the date of filing the refund claim, the fact that the impugned item is a part of Machinery was not in doubt and that fact was one of the reasons for denying Modvat credit as imposed. On 17-5-1996, the Assistant Commissioner rejected the refund claim making the assessee go to Commissioner (Appeals) again. In the appeal, the appellant stated that the earlier declaration under Rule 57G should not come in the way of allowing credit under capit....