TaxTMI 
TaxTMI 
2026 (5) TMI 639
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....ed by the appellant against this order was dismissed vide Order-in-Appeal No. 182-ST/APPL/KNP/2007 dated 30.05.2007. 2.3 Appellant filed a refund/ rebate application dated 15-112007 for granting rebate of Central Excise Duty amounting to Rs.73,86,347/- paid on the goods exported to the countries other than Nepal and Bhutan under Rule 18 of the Central Excise Rules, 2002. 2.4 Appellant filed appeal before CESTAT against Order-in-Appeal dated 30.05.2007 and unconditional stay and waiver from pre-deposit was granted vide Stay Order No. ST/60/08 dated 25.01.2008. 2.5 The claim was scrutinized and sanctioned to the appellant vide Order-in-Original No.05/ACK-II/Ref/08 dated 14-02-2008, but out of the amount sanctioned, an amount of Rs.49,22,148/- was appropriated against pending confirmed dues as per the order in original dated 09.01.2007 read with order in appeal dated 30.05.2007 2.6 Appeal filed by the appellant was allowed by the Tribunal vide order dt. 25.11.2008 setting aside Order-in-Appeal dated 30.05.2007. 2.7 Aggrieved by the Order-in-Original dated 14-02-2008, the appellant filed an appeal before the Commissioner (Appeal). This appeal was allowed vide Order-in-Ap....
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....: ○ Sadvik Asia Ltd. [(2006) 2 SCC 508] ○ Sunder Steels Ltd. [2008 SCC OnLine CESTAT 2136] 3.3 Authorized representative reiterated the findings recorded in the impugned order. 4.1 I have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 Impugned order records the findings as follows: "I have carefully gone through the facts of the case, the impugned refund memorandum, grounds of appeal, the case laws relied upon and the written brief and arguments put forth by the appellants at the time of hearing ..... The appellants have filed this appeal on the ground that full consequential relief, as ordered by the appellate authority, has not been granted to them by the adjudicating authority in as much as the interest on delayed refund was not granted to team. The appellant had requested for interest on delayed refund in terms of Section 11BB of the Central Excise Act, 1944 on the ground that the amount was withheld illegally without any authority of law in support of their claim, the appellant have relied upon the decision of Hon'ble High Court Allahabad in th....
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....ppellate authority and a delay of almost 1 year was caused in getting the refund. Therefore, the interest awarded in the said case for delayed payment of refund was as per the provisions of Section 11BB. On the contrary, in the present case, the amount of refund was released to appellants within the stipulated period of time of the order of the appellate authority, therefore the appellants were not eligible to get the interest. Due to aforesaid reasons, the ratio of the said judgment cannot be applied in the present case. Under the circumstances, I hold that the order passed by the adjudicating authority is proper and legal. As regards the claim for interest on amount of accrued interest, I observe that when the claim for interest is not sustainable, I do not find any reason to examine the said issue. I therefore hold that the claim of the appellant regarding interest on interest is also not maintainable and liable to be set aside." 4.3 The findings recorded in the impugned order need to be examined in light of the decision of Hon'ble Supreme Court in the case of Ranbaxy Laboratories Ltd. [(2011) 10 SCC 292]= [2011 (273) E.L.T. 3 (S.C.)] wherein following has been held:....
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....cisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's current account maintained with the Commissioner of Central Excise; (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (f) the duty of excise and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government, the incidence of duty and interest, if any, paid on such....
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....Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under subsection (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the applic....
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....d any provisions in the Act which provide for payment of such interest on the delayed payment of interest. I find that larger bench of tribunal has in case of Sun Pharmaceuticals [2005 (185) E.L.T. 253 (Tri. - LB)] has held as follows: "The issue referred to the Larger Bench is as to whether interest on delayed payment of interest is permissible under the provisions of Central Excise Act or not. This reference has arisen on account of the Apex Court judgment in C.E., Hyderabad v. ITC Ltd. reported in 2005 (179) E.L.T. 15 and by the Tribunal in the case of Hindustan Motors v. CCE, Calcutta reported in [2003 (155) E.L.T. 306 (Tri.) = 2003 (56) RLT 192]. None has come present on behalf of the appellants before us. However, the ld. Counsel has assisted the Bench. We have heard the ld, SDR and the Counsel. 2. In C.E., Hyderabad v. ITC Ltd. (supra), there was delayed refund of pre-deposit and interest at the rate more than 12% was allowed by the Tribunal. The Apex Court after referring and making the draft circular submitted by the Revenue regarding payment of interest, as part of the order, upheld the payment of interest to the assessee on delayed payment of pre-deposi....
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....(267) ITR-0078-BOM. In that case, the Bombay High Court has ruled that for want of any express provision in the Income Tax Act, the Court has no power to award interest on interest on delayed payment of interest by the department, in the absence of specific provision in that regard in the tax statute. The authorities can levy and collect the interest on delay in payment of tax, provided the statute provides for such obligation of the assessee under the statute and not otherwise. Similarly, the Apex Court in India Carbon Ltd. v. State of Assam - 1997 (106) STC 460 has ruled that interest can be levied and charged on delayed payment of Tax only if the statute, that levies and changes the tax makes a substantive provision in that behalf. 6. Another full Bench of the Hon'ble Bombay High Court in CIT v. Carona Sahu Co. Ltd. - 1984 (146) ITR 452 it has been also observed that though interest is compensatory in character, yet there is no right to receive interest other than by a right created by a statute. It is also well settled that construction of the statute only implies interpretation thereof and not interpretation therein. 7. It has not been disputed before us that....
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....ot provide for grant of interest, the authorities under the Act, including the CEGAT, had no power to award interest." 8. In the light of what has been discussed above, on the basis of the above referred two judgments of the Gujarat High Court, which are under different Tax statute, interest on delayed payment of interest, cannot be held to be permissible under the Central Excise Act and the Rules made thereunder, for want of any specific provision in the Act or the Rules. Therefore, the Tribunal has no power to award such a interest to the assessee. The law laid down in Hindustan Motors v. CCE (supra), to the contrary, being not a good law, stands overruled. The reference stands accordingly answered." 4.7 The decision of Hon'ble Bombay High Court in case of Sandvik Asia relied in the above decision was set aside by the Hon'ble Supreme Court as reported at "29. In our view, the Act recognizes the principle that a person should only be taxed in accordance with law and hence where excess amounts of tax are collected from an assessee or any amounts are wrongfully withheld from an assessee without authority of law the revenue must compensate the assessee. ....
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....ance with the terms and provisions of the said sections. The interest previously granted to it has been computed up to 27-3-1981 and 31-3-1986 (under different sections of the Act) and it's present claim is for compensation for periods of delay after these dates. 34. In the impugned order, the Bombay High Court has rejected the appellant's contention mainly on the ground that the word refund must mean an amount previously paid by an assessee and does not relate to an amount payable by the revenue by way of interest on such sums. The High Court's conclusion is based mainly on the wording of the proviso to Section 240 of the Act. As already discussed by us in paragraph supra the proviso can have no relevance whatsoever as it was not part of the Act during the relevant period. The said proviso was inserted with effect from 1-4-1989. 35. The High Court in its judgment has referred to the provisions of Section 244(1A) and the decision of this Court in Modi Industries Ltd. (supra) extracted two paragraphs from this Court's judgment holding that there can be no question of paying interest under both Section 214(1A) and 244(1A) of the Act simultaneously, and further that ....
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....terest, and this does fall within the meaning of refund as set out in Section 237 of the Act. The relevant provision is Section 240 of the Act which clearly lays down that what is relevant is whether any amount has become due to an assessee, and further the phrase any amount will also encompass interest. This view has been accepted by various High Courts such as the Delhi, Madras, Kerala High Court etc." 4.8 Taking note of the above decision of Hon'ble Supreme Court, Tribunal has in case of Sunder Steels Ltd. [2008 (225) E.L.T. 472 (Tri. - Bang.)] 3. Shri Laxminarayan Goyal, learned Consultant appeared on behalf of the appellants. He urged the following points. The Commissioner (Appeals) has followed the Larger Bench decision in the case of Sun Pharmaceuticals Industries Ltd. v. CCE, Chennai - 2005 (185) E.L.T. 253 (Tri. - LB). But the Apex Court judgment will prevail over the Larger Bench judgment. 4. Further the Larger Bench has not dealt with or distinguished with the Hon'ble Apex Court judgment, thus the Apex Court judgment will rule the field and not the Larger Bench of the Tribunal. Thus the impugned order is erroneous and appellant is entitled for relief....
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....various periods, ranging from 12 to 17 years, in such payment by the Revenue. This Court had further referred to the several decisions which were brought to its notice and also referred to the relevant provisions of the Act which provide for refunds to be made by the Revenue when a superior forum directs refund of certain amounts to an assessee while disposing of an appeal, revision etc. 5. Since, there was an inordinate delay on the part of the Revenue in refunding the amount due to the assessee this Court had thought it fit that the assessee should be properly and adequately compensated and therefore in paragraph 51 of the judgment, the Court while compensating the assessee had directed the Revenue to pay a compensation by way of interest for two periods, namely; for the Assessment Years 1977-78, 1978-79, 1981-82, 1982-83 in a sum of Rs. 40,84,906/- and interest @ 9% from 31-3-1986 to 27-3-1998 and in default, to pay the penal interest @ 15% per annum for the aforesaid period. 6. In our considered view, the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik case (supra) this Cou....
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....period beyond 20 years where the matter was not strictly covered by the statute and as such it would be in the realm of discretion of the Court. It must also be noted here that the inordinate delay of up to 17 years in making refunds was a special circumstance when this Court was persuaded to accept grant of interest at the rate of 9 per cent per annum in Sandvik Asia Ltd. Even while doing so, the observations made by this Court in Paragraph 48 of the decision are quite clear that "the award of interest in refund and amount must be as per the statutory provisions of law and whenever a specific provision has been made under the statute such provision has to govern the field." The subsequent decision of the Bench of three Judges in Gujarat Fluoro Chemicals noticed that the grant of interest at the rate of 9 per cent was in the facts of the case in Sandvik Asia Ltd. 19. Since the delay in the instant case was in the region of 94 to 290 days and not so inordinate as was the case in Sandvik Asia Ltd., the matter has to be seen purely in the light of the concerned statutory provisions. In terms of the principal part of Section 56 of the CGST Act, the interest would be awarded at....