BY TIOL News Service

NEW DELHI, MAR 10, 2017: THE appellants are engaged in the export of Iron and Steel products and filed claims for refund in terms of Notification 41/2007-ST and 17/2009-ST for refund of service tax paid on various services in connection with export of said goods.

The claims were rejected but were later sanctioned by the Commissioner (Appeals). Thereafter, the appellant sought payment of interest towards delayed disbursement of refund in terms of Section 11BB of the CEA, 1944.

The Original Authority rejected their request for interest on the ground that the provision of Section 11B and Section 11BB are not applicable to the refund claim under the above said notifications.

The Commissioner (Appeals) held that the provision of Section 11BB are applicable to the case in hand , however, he held that there is no delay in sanction of refund considering the date of letter submitted by the appellant to the Jurisdictional AC referring to the appellate order in their favour for early sanction of refund. Inasmuch as since refund has been sanctioned within three months from the date of the letter, there is no occasion to pay any interest, the lower appellate authority held.

The appellant is, therefore, before the CESTAT and submitted that the impugned order is totally misconceived as it has wrongly considered the‘reminder letter' as the relevant date to decide the time limit u/s 11B of CEA, 1944.

The Bench observed -

"4. … It is clear that the impugned orders held that provisions of Section 11B/Section 11BB are available to the appellant in connection with their refund claims. However, while applying the relevant date, the learned Commissioner (Appeals) has completely misread the statutory provision of Section 11B to hold that the relevant date will start from the date of letter of the appellant to the Jurisdictional Assistant Commissioner to remind him of the appellate order in their favour and to sanction the refund early alongwith interest. It is clear that the said reminder letter has no relevance to determine the time limit under Section 11B. Further, I also note that the learned Commissioner (Appeals) referred to the provision of Clause (ec) under Explanation B to Section 11B. The said provision is relating to consequential refund arising out of an appellate order. In the present case, I note that the refund claim has not arisen consequential to any appellate order. The appellate order only decides the correctness of the claim already filed and rejected by the Original Authority. This cannot be considered as a refund consequent on an appellate order. Further, the refund amount paid is with reference to the original application for refund filed by the appellant…."

Drawing support from the apex court decision in Ranbaxy Laboratories Ltd. - 2011-TIOL-105-SC-CX , the Bench held that the impugned orders were not sustainable and, therefore, set aside.

The appeals were allowed with consequential relief.

(See 2017-TIOL-777-CESTAT-DEL)