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Judgment
Appellants have filed these three appeals directed against three different impugned orders all dated 09/11/2020 whereby the
Commissioner(Appeals) has rejected their appeals for grant of interest for delayed refunds. Since the issue involved in all the three appeals is similar,
all the three appeals are being taken up together for discussion and disposal. For the sake of convenience, the facts of Central Excise appeal
No.20441/2020 in the case of General Commodities Pvt. Ltd. are taken.
Briefly, the facts of the case are that the appellant is engaged in the manufacture of HDPE fabrics, PP fabrics and PP bags. On 24.06.2009, upon
closure of its factory and surrender of Central Excise registration certificate, the appellant had unutilized cenvat credit of Rs.32,42,381/- and they
claimed the refund of this amount on 08.07.2009. The Revenue thereafter issued a show-cause notice dt. 29.07.2009 proposing to reject the refund
claim. The original authority vide Order-in-Original dt. 12.11.2009 rejected the refund claim and the said Order-in-Original was upheld by the appellate
authority in Order-in-Appeal dt. 08.09.2010. The appellant filed appeal before the Tribunal and the Tribunal vide its Final Order No.20538/2016 dt.
12.07.2016 had set aside the Order-in-Appeal and allowed the appeal of the appellant with consequential relief. Thereafter the Revenue filed a
statutory appeal before the Hon’ble High Court of Karnataka in CEA No.3/2017 which was dismissed as withdrawn by the Revenue vide
judgment dt. 08.08.2018; thus the appeal of the Revenue was dismissed by the Hon’ble High Court and the decision of the Tribunal has attained
finality. Thereafter the appellant filed an application claiming refund of the said amount for the second time on 13.06.2017 and the jurisdictional
authority sanctionined the refund of Rs.32,42,381/- but did not grant interest on the delayed refund. Thereafter the appellant filed an application on
23.08.2018 for claiming the interest of Rs.15,69,669/- under Section 11BB of the Central Excise Act, 1944. The Revenue vide letter dt. 24.10.2018
informed the appellant that no further action lies in the matter as the appellant has not filed any appeal against the Order-in-Appeal No.3/2017 dt.
25.09.2017. Thereafter the appellant approached the Tribunal for appropriate direction to the original authority under Rules 40 and 41 of the CESTAT
(Procedure) Rules, 1982 to implement the order of the Tribunal with consequential relief and the Tribunal vide its Miscellaneous Order No.20261-
20264/2019 dt. 23.04.2019 directed the original authority to dispose the application pending before him within a period of two weeks after receipt of
the certified copy of the order. Thereafter the appellant again wrote a letter to the original authority to comply with the direction of the CESTAT
within the time frame but instead of complying with the same, the Revenue issued a show-cause notice dt. 15.05.2019 proposing to deny the interest
on the ground that the appellant has not filed the appeal against the Order-in-Original and consequently the adjudicating authority does not have the
jurisdiction to review / reopen the adjudication order already passed and hence rejected the claim of the appellant for grant of interest. Aggrieved by
the said order, appellant filed appeal before the Commissioner(Appeals) who rejected the appeal on the same grounds as was done by the original
authority. Hence the present appeal.
Learned counsel for the appellant submitted that the impugned orders are not sustainable in law as the same have been passed without appreciating
the facts and the law and the binding judicial precedent decisions. He further submitted that the impugned orders are in violation of principles of
natural justice as the grounds raised by the appellants in the grounds of appeals have not been considered by the learned Commissioner(Appeals) and
he has merely repeated the reasoning given by the original authority. He further submitted that both the authorities have failed to implement the order
issued by the Tribunal wherein the Tribunal upholding the refund claim of unutilized cenvat credit clearly allowed the consequential relief which would
include the interest thereon. Learned counsel further submitted that when there is separate provision in the form of Section 11BB available for grant
of interest for delayed refund and the appellant has requested for grant of interest under Section 11BB but both the authorities have failed to grant the
same. He further submitted that the finding of the lower authority in paragraph 12 of the Order-in-Appeal has concluded that ‘the subject matter
had reached a logical conclusion and it was required to be treated as the matter closed or issue settled’ is wholly irrelevant and misconceived.
Learned counsel further submitted that the lower appellate authority has failed to appreciate that the amount claimed by them was not towards any
refund of interest paid by the appellant rather it was a mere claim of interest under Section 11BB for the delayed refund. The said proceedings under
Section 11BB is different whereas refund of accumulated cenvat credit was claimed under Rule 5 of CCR, 2004. He further submitted that granting
of interest under Section 11BB does not amount to reopening of a decided case as opined by both the authorities. He further submitted that this issue
is no more res integra and has been settled by the decision of the Apex Court in the case of Ranbaxy Laboratories Ltd. Vs. UOI [2011(273) ELT 3
(SC)] wherein the Hon’ble Apex Court had held that the liability of the Revenue to pay interest under Section 11BB commences from the date of
expiry of three months from the date of the receipt of the application for refund under Section 11B(1) of the Act and not on the expiry date of the said
period from the date on which the order of refund was made. Learned counsel also cited Board’s circular No.670/61/2002-CX dt. 01.10.2002- CX
wherein also the Board has allowed the payment of interest after the expiry of three months from the date of filing the application of refund. He
further submitted that the Circular issued by Board is also binding on the Department. Learned counsel also cited the decision of this Tribunal in the
case of Microsoft Global Service Centre India Pvt. Ltd. Vs. CCT [2019-TIOL-808-CESTAT-Bang.] wherein also the Tribunal after following the
decision of the Apex Court in Ranbaxy Laboratories Ltd. case, allowed the interest on delayed refund.
On the other hand, the learned AR reiterated the findings in the impugned order.
5.1. After considering the submissions of both the parties and perusal of the material on record, I find that both the authorities have failed to appreciate
the reasoning given by the Tribunal while allowing the appeals of the appellant for refund of accumulated cenvat credit under Rule 5 with
consequential relief. The Tribunal vide its Final Order No.20538/2016 dt. 12.07.2016 allowed the appeal of the appellant and the Revenue’s appeal
before the High Court was also dismissed; hence the decision of the Tribunal attained finality. In spite of that, the appellant had to file again the refund
application though the original authority vide its order dt. 25.09.2017 sanctioned the refund but did not grant interest in view of the consequential relief
given by the Tribunal. Thereafter the appellant filed a separate application under Section 11BB of the Central Excise Act, 1944 for claiming the
interest for the delay in granting the refund. But the Revenue did not take any action on the application of the appellant and the appellant had to
approach the Tribunal for seeking direction to the original authority to dispose of the application and the Tribunal vide its order dt. 23.04.2019 directed
the original authority to dispose of the application and thereafter the Revenue again issued a showcause notice dt. 15.05.2019 to the appellant
proposing to reject the demand for interest on the grounds that the original authority does not have the jurisdiction to review or reopen the adjudication
order already passed and the appellant had the liberty to file appeal against such adjudication order but he had not filed the same and hence the original
authority refused to grant the interest. Further I find that the Commissioner(Appeals) has also rejected the appeal on the same grounds as taken by the
original authority. I find that the claim of interest by a separate application under Section 11BB does not amount to review or reopen of such
completed orders and the appellant has right to claim the interest under Section 11BB. Further I find that the application filed by the appellant was not
towards refund of cenvat credit paid by them but towards the grant of interest on delayed sanction of the refund amount. Further I find that the
entitlement to claim interest on delayed refund is already settled in favour of the assessee by the judgment of the Hon’ble Apex Court in the case
of Ranbaxy Laboratories Ltd. cited supra wherein the Apex Court in para 9 of the said judgment has observed as under:-
It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been
made under Section 11B of the 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 sub-section (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 application for
refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under
the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1)
of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under
Section 11BB of the Act becomes payable.
5.2. Further I find that the Board vide its circular No.670/61/2002-CX dt. 01.10.2002 has also allowed the payment of interest on delayed refund.
Paragraph 2 of the said Circular is reproduced below:-
In this connection, Board would like to stress that the provisions of section 11BB of Central Excise Act, 1944 are attracted automatically
for any refund sanctioned beyond a period of three months. The jurisdictional Central Excise Officers are not required to wait for
instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest.
Simultaneously, Board would like to draw attention to Circular No. 398/31/98-CX, dated 2-6-98 [1998 (100) E.L.T. T16] wherein Board has
directed that responsibility should be fixed for not disposing of the refund/rebate claims within three months from the date of receipt of
application. Accordingly, jurisdictional Commissioners may devise a suitable monitoring mechanism to ensure timely disposal of
refund/rebate claims. Whereas all necessary action should be taken to ensure that no interest liability is attracted, should the liability arise,
the legal provision for the payment of interest should be scrupulously followed.
5.3. Further this Tribunal in the case of Microsoft Global Service Centre India Pvt. Ltd. cited supra has also allowed the claim of interest under
identical circumstances.
By following the ratio of the above said decisions of the Apex Court and this Tribunal, I am of the considered view that the appellants are entitled
for interest on delayed payment of refund. Hence I set aside the impugned orders and remand the matter back to the original authority with the
direction to compute the interest in accordance with law and grant the same to the appellants within a period of three months from the receipt of
certified copy of this order in all the three cases. All the three appeals are allowed.
(Order was pronounced in Open Court on 16/06/2021)