2019 (3) TMI 1750

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.... aside the impugned order Commissioner (Appeals) and allowing the appeal without assigning any reasons and recording any finding on the controversy and recorded perverse finding? 2. Whether on the facts and in the circumstances of the case, CESTAT was correct in setting aside the order of the Commissioner (Appeals) and allowing the appeal without recording specific finding whether the order of the CESTAT is interference with the order of remand by the Commissioner (Appeals) or granting interest under Section 11BB of Central Excise Act and recorded perverse finding? 3. Whether on the facts and in the circumstances of the case, CESTAT was correct in allowing the appeal by giving reference to the judgments dealing with the interest under Section 11BB of Central Excise Act, without recording any finding on the eligibility of interest under Section 11BB of the Central Excise Act, the manner of computation of the interest, period of commencement of interest, the quantum of refund on which interest to be quantified, in the absence of such an issue was considered either by the adjudicating authority           or ....

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....-1), who dismissed these two appeals in No. 821 and 822 of 2017 holding that the respondent would not be entitled for payment of interest because the provision for payment of interest on delayed refund under Section 11BB of the Central Excise Act, 1944 would apply only where there has been excess payment or collection of duty. The Commissioner of Central Taxes (Appeals-1) emphasized that the principle for payment of interest for the delay in refund contained in Section 11BB of the Central Excise Act, 1944 cannot be extrapolated into Schema for refund of Unutilized Cenvat credit, as such Schema is nothing more than a facilitative mechanism provided to the exporter to convert the unutilized credit lying in its account into cash. The fundamental difference between the Schema for the unutilized Cenvat credit and refund of the excess duty paid or collected, the Commissioner of Central Taxes emphasized, is that in the former the unutilized credit lies in the assessee's account unlike in the case of excess payment of duty that would be with the State Exchequer; as the State Exchequer would have the benefit of excess payment of duty, the provision for payment of interest is provided under ....

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.... in the account of the assessee and it is therefore distinct and separate from the excess duty paid or collected which would stand to the credit of the exchequer. As such, no recourse should be had to the provisions of 11BB of the Act to award interest in the event there is any delay in refund of unutilized Cenvat credit. 6. The Learned Counsel for the appellant-Revenue argued that the Appellate Tribunal has not recorded any finding on the respondent's eligibility to interest under Section 11BB of the Act, if interest is payable, the manner of computation of interest, the period of commencement for computing interest and the quantum of refund on which interest is to be quantified. As such, the impugned order is perfunctory and contrary to law. 7. The Learned Counsel for the respondent, on the other hand, submitted that this question whether interest on delayed refund of unutilized Cenvat credit as contemplated under Rule 5 of the Cenvat Credit Rules and Notification dated 18-6-2012 would be permissible under Section 11BB of the Central Excise Act has been considered by the High Court of Madras [2008 (221) E.L.T. 38 (Mad.)] as well as the High Court of Gujarat. In fa....

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....rice/value. Hence, the duty payable on the ultimately manufactured goods/ services rendered stands reduced to the extent of duty already paid on the inputs. Thus, the duty paid on inputs by the supplier has already been actually received by the exchequer. Therefore, there is a basic fallacy in the argument by the Revenue that refund of unutilized Cenvat credit is different from excess duty paid or collected as contemplated under Section 11B of the Act. As such, the High Court of Gujarat held that when there is delay in sanctioning the refund under Rule 5 of the Cenvat Credit Rules and Notification dated 18-6-2012, the provisions of Section 11BB of the Central Excise Act would be clearly attracted. 10. The High Court of Madras, which was considering allowing interest on the delayed refund of unutilized credit under the Modvat Credit Scheme, has also concluded that the Modvat credit taken was nothing but payment of duty which would be available to the assessee on the assessee paying duty on inputs at the time of clearance of final bills and therefore, there is statutory obligation on the part of the appellant-Revenue under Section 11BB of the Act to pay interest for the delay....