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Judgment
The common issue for consideration in all the above appeals is whether the appellant is correct in its claim for interest under Section 11BB of the Central Excise Act, 1944, on the refund sanctioned by the authority. Common facts which are not disputed by either side, are that the appellant is engaged in "Business Auxiliary Services" to foreign clients; the appellant filed refund claims under Rule 5 of Cenvat Credit Rules, 2004 (CCR for short) read with Notification No. 27/2012-CE (NT) dated 18.06.2012, of various amounts pertaining to various periods, for the input services availed and used by them in providing taxable output services which were exported out of India. The following is the table depicting refund period vis-àvis the appeals before this forum:-
S.No.
Appeal No.
OIA
Refund Period
Refund appln. Filed date
Refund received date
1
ST/40847/2018
329 Dt.30.11.17
Apr14 to June14
04.03.2015
24.01.2017
2
ST/40848/2018
330 Dt.30.11.17
July15 to Sep15
11.03.2016
24.01.2017
3
ST/40849/2018
331 Dt.30.11.17
Apr15 to Jun 15
11.03.2016
24.01.2017
4
ST/40850/2018
332 Dt.30.11.17
July14 to Sep14
04.03.2015
24.01.2017
5
ST/40851/2018
334 Dt.30.11.17
Oct14 to Dec14
26.11.2015
24.01.2017
6
ST/40852/2018
335 Dt.30.11.17
Jan15 to Mar15
26.11.2015
24.01.2017
Shri R. Viswanathan, learned CA appeared for the appellant and Shri M.Jagan Babu, AC, learned Departmental Representative defended the Revenue, heard both sides and perused the records.
A perusal of the Orders-in Original reveals that the Assistant Commissioner has not granted or even considered the issue of interest under Section 11BB ibid as correctly pointed out by the Commissioner (Appeals) in the impugned order. But, however, in the impugned order the Commissioner (Appeals) negatives the appellant's claim for interest terming it as 'Premature'.
Hon'ble Supreme Court in the case of M/s. Ranbaxy Laboratories Ltd vs Union Of India & Others has categorically held as under:-
"9. 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."
The Hon'ble Supreme Court also took pains to consider a Circular issued by the CBEC ie., Circular No. 620/61/2002- CX dated 01.10.2002 - F. No. 268/51/2002-CX.8 noted the following:-
"1. ..........
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 02.06.1998 [1998 (100) ELT 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......"
Finally, Hon'ble Supreme Court has concluded that the liability of the Revenue to pay interest under Section 11 BB ibid commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act.
The refund in the case on hand was sanctioned by the sanctioning authority after considering the facts and documents available as on the date of such sanction. So, there was no issue made out while sanctioning the refunds; the interest on the said refund which is a consequence of the refund, cannot be denied on flimsy grounds. This aspect when considered in the light of the dictum of the Hon'ble Supreme Court in Ranbaxy Laboratories Ltd. (supra), leaves no room for any doubt as to the eligibility of the claimant, especially when the refund is sanctioned. With the above observations, I have no reservation in holding that the appellant shall be granted interest, however I deem it proper to remand these cases to the file of the Asst. Commissioner/sanctioning authority to workout appropriate interest and sanction the same to the appellant without any further delay, within a period of 3 months of receipt of this order at the concerned Commissionerate.
Accordingly, the appeals stand allowed on the above terms with consequential benefits if any, as per law.
(Order pronounced in the Open Court on 25.03.2021)