By TIOL News Service

AHMEDABAD, OCT 15, 2014: THE appellant filed a refund claim on 27.09.2004 for Rs.7.11 crores in respect of accumulated credit under the provisions of Rule 5 of CCR, 2004. All the documents required for the purpose of processing the refund claim were not filed by the appellant. On 08.12.2005, appellant filed a revised refund claim of Rs.7.13 crores out of which an amount of Rs.6.45 crores was sanctioned by the adjudicating authority vide order dated 09.3.2006 and the balance amount was held to be time barred.

Later, the appellant filed a claim of Rs.49.39 lakhs as interest u/s 11BB of CEA, 1944 for the delay in sanctioning their refund of Rs.6.45 crores but the same was rejected.

On an appeal, it was held by the lower appellate authority that the delay in sanction of refund claim was due to non-furnishing of documents by the appellant and not due to the Revenue. Secondly, it was held that refund was not filed in terms of Section 11B and no interest u/s 11BB of the CEA, 1944 is admissible. Appeal was thus rejected and, therefore, the appellant is before the CESTAT.

The appellant argued that export period is from 29.7.2003 to 07.2.2004 and the refund u/r 5 of CCR, 2004 was filed on 27.09.2004;that refund for the period July 2003 to Aug 2003 was considered time barred which means that 27.09.2004 was considered as date of filing of refund claim;that if 08.12.2005 was considered to be the date of filing the refund claim then the entire refund could have been time barred. Inasmuch as since the refund claim is considered to have been filed on 27.09.2004 and the same was sanctioned on 09.3.2006, the interest for the period three months after 27.09.2004 till the date of sanction on 09.3.2006 is admissible. It is further submitted that in view of clause 6 of Notification 11/2002-CE (NT) dated 01.3.2002the provisions of Section 11B of the CEA, 1944 are applicable and, therefore, interest u/s 11BB is also admissible. Reliance is inter alia placed on the decision in Reliance Industries Limited 2008-TIOL-1371-CESTAT-AHM.

The AR defended the order passed by the Commissioner(A) on the ground that delay was caused due to non-production of documents.

The Bench observed -

++ It is observed from the case records that refund claim was filed on 27.09.2004 for Rs.7,11,45,917/- and sanctioned on 09.3.2006 for Rs.6,45,83,460/-. Remaining refund was mainly rejected as time barred.

++ It is apparent from the order portion of the OIO dated 09.3.2006 that refund claim was decided under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No.11/2002-CE (NT) dated 01.3.2002 and Section 11B of Central Excise Act, 1944.

++ Section 11B has also been made applicable to the refund claim of Rule 5 of Cenvat Credit Rules, 2004 as per Clause 6 of Appendix to Notification No. 11/2002-CE(NT) dated 01.3.2002. In view of the above facts it will be inappropriate to say that interest provisions of Section 11BB of Central Excise Act, 1944 are not applicable to refunds under Rule 5 of the Cenvat Credit Rules, 2004.

++ The date of filing of refund claim has been taken as 27.09.2004 to reject/sanction the refund claim of the appellant which was sanctioned on 09.3.2006. Assistant Commissioner, Central Excise, Div-II, Silvassa vide letter dated 03.11.2004 raised certain queries but did not return the refund claim filed by the appellant. No efforts were made by the Revenue to reject the refund claim as unsubstantiated when appellant was not providing the required details/ documents. There was thus a delay in sanctioning the refund claim of the appellant from three months after 27.09.2004 to 09.3.2006.

++ Accordingly, it is held that interest on delayed payment of refund of accumulated CENVAT credit under Rule 5 of the Cenvat Credit Rules, 2004 read with Section 11B is admissible to the appellant under Section 11BB of the Central Excise Act, 1944.

In fine, the appeal was allowed with consequential relief.

(See 2014-TIOL-2009-CESTAT-AHM)