CX - Once Assistant Commissioner approached matter in terms of Sec 11B of Act but amount as directed to be refunded was not refunded within time provided by statutory provision, this is a fit case to award interest - Petition allowed: HC
By TIOL News Service
MUMBAI, MAR 08, 2016: THE Assistant Commissioner, Central Excise, Taloja Division, Belapur Commissionerate passed the following order on 28th April 2015 -
i) In view of the above, I sanction an amount of Rs. 1,74,75,648/- (Rs. 2,00,00,000 - Rs. 25,24,352) (Rupees One Crore Seventy Four Lacs Seventy Five Thousand Six Hundred and Forty Eight Only) by way of Refund granted under provisions of Section 11B to M/s. Tien Yuan India Pvt Ltd in respect of the refund claim for Rs. 2,00,00,000/- (Rupees Two Crore only), filed by them.
ii) The amount of refund claim sanctioned may be remitted to them by ECS (NEFT/RTGS) and necessary entry may be passed in the refund register.
The petitioner is before the High Court with a Writ Petition and seeks interest on the sum of Rs.2croresdeposited by the Petitioner on 7th September 2006 till the date of actual payment under Section 11B of the CEA, 1944.
The petitioner invited the attention of the High Court to the provisions of section 11BB of the CEA, 1944 and seeks interest on the delay in granting refund.
The counsel for the Revenue submitted that the interest is not payable because the Petitioner did not pay the amount but deposited it in terms of an interim order of the CESTAT. Inasmuch as once there was no payment of duty, then, the interest as claimed is not payable.
The High Court inter alia observed -
++ The findings of the Assistant Commissioner refer to a payment of Rs.2,00,00,000/- stated to be deposited voluntarily by the Petitioner/Assessee on 7th September 2006 during the investigation process.
++ Once the case was not of a credit to the Fund, but of payment to the Applicant, then in terms of the Section itself and the order made in the present case, it is a refund. If it is a refund and granted accordingly, then the amount must be disbursed within the period specified by law. If it is not so refunded, then the obligation to pay interest must follow.
++ We are unable to agree that the amount was not refunded pursuant to any claim or application for refund or that the voluntary payment by the Petitioner of duty amount was a deposit.
++ Once the Assistant Commissioner approached the matter in terms of Section 11B of the Act but the amount as directed to be refunded was not refunded within the time provided by the statutory provision, that, this is a fit case to award interest that is to be awarded for delayed refund. If the duty ordered to be refunded under sub-section (2) of Section 11B is not refunded within three months from the date of receipt of the application under subsection (1) of Section 11B of the Act, then, the award of interest must follow as mandated by Section 11BB(1) of the Central Excise Act, 1944.
++ In the present case, the application made for refund under Section 11B is dated 4th October 2006. The amount of refund as directed in terms of the order dated 28th April 2015 has been disbursed and paid on 28th April 2015 by RTGS.
++ Therefore, the Petitioners are entitled to interest at the rate of 6% from the expiry of the period of three months from the date of the application, meaning thereby the amount shall carry interest at the rate of 6% per annum from 4th January 2007 to 27th April 2015.
Directing that the amount be paid within a period of two weeks, the petition was allowed.
(See 2016-TIOL-433-HC-MUM-CX)
