AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 604
X X X X Extracts X X X X
X X X X Extracts X X X X
....011, dt.17.08.2011, passed by the Customs, Excise & Service Tax Appellate Tribunal, South Zone Bench at Bangalore (for short 'CESTAT') in Appeal No. E/1124/2006. 2. The brief facts of the case are that the appellant is a company engaged in the manufacture and export of bulk drugs; that in the middle of January, 1997, the jurisdictional Central Excise Superintendent, directed the appellant to pay Rs. 31,52,256/- alleging that the appellant had violated the Customs Notification No. 203/92, dt.19.05.1992 and was therefore, liable to pay interest as per the amnesty scheme announced by the Director of Drawback vide letter DOF. No. 605/140/95-DBK, dt.03.01.1997. As the Superintendent threatened to stop the export clearances, if the said direct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nths from the date of receipt of the application for refund as and when made by the appellant, under Section 11BB of Central Excise Act, 1944 (for short 'the Act, 1944'), the appellant becomes entitled to interest for the said period. 5. Further, pursuant to the learned CESTAT's Final Order No. 548/2006, though the appellant made refund application on 02.06.1997, the Assistant Commissioner refunded the amount of Rs. 31,52,256/- only on 02.07.2006, and the Department refused to pay interest for the delay of refund for more than nine years from the date the refund application, i.e., from 02.06.1997 to 02.07.2006, stating that the said amount originally was collected as "interest" and not as "duty," and therefore, no interest could be grant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....zation?. 9. Heard Sri Muthuma Rajendran, learned counsel representing Sri Karthik Ramana Puttamreddy, for appellant and Sri A. Ramakrishna Reddy, learned Senior Standing Counsel for the Central Board of Excise and Customs (CBEC) for respondent. 10. The learned counsel for the appellant contended that the amount of Rs. 31,52,256/- was forcibly collected by the respondents-authorities on 31.01.1997, and was refunded only on 02.07.2006, after prolonged and multiple rounds of litigation, though the appellant is entitled for interest, the Department has refused to pay the same on erroneous views and facts. 10.1 By placing reliance on the judgment of the Hon'ble Supreme Court in Sandvik Asia Ltd's case (supra), it was contended by the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee is entitled for the interest on the delayed refund of the amount that was forcefully collected by the respondents-authorities and whether interest is payable on such unpaid interest from 02.06.1997 to 02.07.2006 and also further interest on the said amount, till realization. 13. In the facts of this case, while the Customs Act, 1962, does not expressly provide for payment of interest on the interest collected wrongly, it is trite law that when an amount is wrongfully collected or withheld from an assessee without legal authority, the Revenue is bound to compensate the assessee. More so, section 11BB of the Act, 1944, mandates payment of interest for delayed refunds from the expiry of three-months period from the date of receip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 16. In the instant case, the interest of Rs. 31,52,256/- on the duty paid was forcefully collected from the assessee, even though the Revenue was not entitled to collect the same and for a considerable period from 1997 to 2006, the said amount was kept with the revenue and only in the year 2006, the said amount was refunded to the assessee. 17. In Sandvik Asia Ltd's case (supra), it was categorically held by the Hon'ble Supreme Court that even in the absence of specific provision, the amounts collected forcefully from the assessee should not be kept with the revenue for a longer period and that the Court further held that the assessee is also entitled for interest on the said amount. 18. Thus, in the light of the above judicial pr....