TaxTMI 
TaxTMI 
2009 (5) TMI 700
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....r (Appeals) vide its order dated 24-9-96. When the matter was carried in appeal before this Tribunal vide its order dated 29-12-1998, the orders passed by the lower authorities were quashed and set aside. Meanwhile, the appellants had to deposit a sum of Rs. 1,31,00,000/- in the course of the said proceedings in order to get stay of the execution of the order passed by the adjudicating authority. Consequent to the quashing of the said demand the Tribunal by its order dated 29-12-1998 [2003 (159) E.L.T. 1187 (Tri.-Del.)], the appellants claimed refund of the said amount of Rs. 1,31,00,000/- by a refund application dated 23-2-2001. The Department vide order dated 11th April, 2000 allowed the application for refund of Rs. 1,31,00,000/- but did not order payment of interest even though there was delay in refunding amount. Under letter dated 3rd July 2000 addressed to the Deputy Commissioner, the appellants demanded the amount of interest to the tune of Rs. 28,16,579/- for a period from 23-5-99 to 13-4-2000 on the said amount of Rs. 1,31,00,000/-. The said letter was followed by the reminders dated 13-7-2000, 6-10-2000, 2-12-2000, 16-1-2001, 27-1-2001, 11-7-2001 and 10-8-2001. The Deput....
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....t is also undisputed fact that the demand of duty was quashed and set aside by the order of the Tribunal on 29-12-1998. Undisputedly, the appellants thereafter, preferred an application dated 23-2-1999 claiming refund of the said amount of Rs. 1,31,00,000/-. Undoubtedly, the amount of Rs. 1,31,00,000/- belonged to the appellants and the department had no right to retain the same. However, it was not refunded to the appellants till 11-4-2000. At the same time, it is also not in dispute that the department had preferred a reference application against the order dated 29-12-1998 which came to be disposed of on 19-1-2000. Equally, it is true that it is not in dispute that the amount of Rs. 1,31,00,000/- was refundable to the appellants consequent to the order passed by the Tribunal on 29-12-1998 as there was no demand for duty pending against the appellants, subsequent to the said order of the Tribunal. 8. The question, therefore, arises is as to whether filing of the reference application against the order dated 29-12-1998 would automatically result in stay of refund claim in relation to the amount which was deposited by the appellants for obtaining stay of the order dated 24-9-....
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.... ultimately found to be payable liability is with effect from expiry of three months of the date of receipt of application required to be made under Section 11B(1). The rate of interest is to be prescribed by the Board and the interest is payable with effect from the date commencing from the expiry of three months from the date of receipt of such application till the refund of such duty." 12. Similarly, the Allahabad High Court in Hamdard (Wakf) Laboratories v. UOI referring Section 11BB of the said Act held thus :- "6. From a bare reading of the provisions of Section 11BB of the Act, we find that the legislature by the aforesaid provision has cast a duty upon the adjudicating authority to decide the claim for refund immediately within three months failing which the liability for interest start running after excluding the period of three months from the date of the application. Admittedly, in the present case, it is not in dispute that the claim for refund was made on 25th August, 1999 whereas the order for refund has been passed on 16th November, 2000. Under the provision of Section 11BB of the Act, interest start running after three months from the date of the applica....
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....h interest becomes payable under Section 11BB of the Act. Interest under Section 11BB of the Act becomes payable on expiry of period of three months from the date of the receipt of the application for refund if the amount is not refunded within three months from the date of receipt of the application. The learned Counsel appearing for respondent also relied in support of his submission on the judgments of various High Courts. However, in our opinion, the position of law is absolutely clear that the interest is payable under Section 11BB of the Act on expiry of period of three months from the date of receipt of the application and that Explanation appearing below Section 11BB of the Act does not have any effect or connection with the date from which interest under Section 11BB of the Act becomes payable. The only purpose served by the explanation, as observed above, is to introduce a deeming fiction which is relevant for the purpose of sub-section (2) of Section 11B of the Act." 14. It is also to be noted that the efforts on the part of the department to challenge the order passed by the Rajasthan High Court in J.K. Cement Works proved futile as the Special Leave to Appeal (Ci....