Case Note & Summary
The appellant, Lavino Kapur Cotton Pvt. Ltd., filed four refund applications under Rule 5 of the CENVAT Credit Rules, 2004, for refund of duty amounting to Rs.59,35,217/- on various dates in 2005, 2006 and 2007. The adjudicating authority rejected the refund claims, but the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the refunds by its order dated 10 February 2016. After the tribunal's order, the appellant filed refund applications on 15 March 2016, and the refund was sanctioned on 31 March 2016. The appellant claimed interest under Section 11BB of the Central Excise Act, 1944 from the date of the initial refund claims (2005-2007), but the department granted interest only from the date of the tribunal's order (10 February 2016). The CESTAT, by its order dated 13 October 2017, held that the appellant was entitled to interest only after three months of filing of the refund applications after the tribunal order. The appellant appealed to the High Court. The High Court framed the substantial question of law as whether the CESTAT's order was contrary to the Supreme Court decision in Ranbaxy Laboratories Ltd. v. UoI (2011-TIOL-105-SC-CX), which held that interest is payable from the expiry of three months from the date of filing of the initial refund claim, not from the date of the order granting refund. The High Court allowed the appeals, setting aside the CESTAT order and directing that interest under Section 11BB be paid from the expiry of three months from the date of the initial refund claims, with payment within eight weeks.
Headnote
A) Central Excise - Refund - Interest under Section 11BB - The issue was whether interest under Section 11BB of the Central Excise Act, 1944 is payable from the expiry of three months from the date of filing of the initial refund claim or from the date of the order of the authority finally granting refund. The court held that interest is payable from the expiry of three months from the date of filing of the initial refund claim, following the Supreme Court decision in Ranbaxy Laboratories Ltd. v. UoI. (Paras 1-11)
Issue of Consideration
Whether interest under Section 11BB of the Central Excise Act, 1944 is payable from the expiry of three months from the date of filing of the initial refund claim or from the date of the order of the authority finally granting refund
Final Decision
Appeals allowed. The order of CESTAT dated 13 October 2017 is set aside. The respondent is directed to pay interest under Section 11BB of the Central Excise Act, 1944 from the expiry of three months from the date of filing of the initial refund claims (2005-2007) until the date of payment, within eight weeks from the date of the judgment.
Law Points
- Interest under Section 11BB of Central Excise Act
- 1944 is payable from the expiry of three months from the date of filing of the initial refund claim
- not from the date of the order granting refund
- Ranbaxy Laboratories Ltd. v. UoI followed
Case Details
2022 LawText (BOM) (12) 71
Central Excise Appeal No.121 of 2019 with Central Excise Appeal No.122 of 2019, Central Excise Appeal No.123 of 2019, Central Excise Appeal No.124 of 2019, Central Excise Appeal No.125 of 2019
Dhiraj Singh Thakur, Valmiki Sa Menezes
Mr. Darius Shroff, Senior Advocate a/w Mr. Rahul P. Jain i/b Alpha Chambers for Appellant, Mr. Sham Walve a/w Ms. Sangeeta Yadav for the Respondent
Lavino Kapur Cotton Pvt. Ltd.
The Commissioner of CGST & Central Excise, Palghar
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Nature of Litigation
Appeal against order of CESTAT regarding interest on refund under Section 11BB of Central Excise Act, 1944
Remedy Sought
Appellant sought interest under Section 11BB from the date of initial refund claims (2005-2007) instead of from the date of tribunal order
Filing Reason
CESTAT held that interest is payable only after three months of filing refund applications after tribunal order, contrary to Supreme Court decision
Previous Decisions
CESTAT order dated 13 October 2017 in Appeals ST/85044/85046/86545/86555 of 2017
Issues
Whether interest under Section 11BB of Central Excise Act, 1944 is payable from the expiry of three months from the date of filing of the initial refund claim or from the date of the order granting refund
Submissions/Arguments
Appellant argued that interest under Section 11BB is payable from the expiry of three months from the date of filing of the initial refund claim, relying on Ranbaxy Laboratories Ltd. v. UoI
Respondent argued that interest is payable only after three months of filing refund applications after the tribunal order
Ratio Decidendi
Interest under Section 11BB of the Central Excise Act, 1944 is payable from the expiry of three months from the date of filing of the initial refund claim, not from the date of the order granting refund, as held by the Supreme Court in Ranbaxy Laboratories Ltd. v. UoI.
Judgment Excerpts
Whether the order passed by Appellate Tribunal, CESTAT, holding that the appellate company is entitled to interest u/s. 11BB of the Act only after three months of the filing of refund applications after the Tribunal Order granting refund is contrary to the decision of the Supreme court in the case of Ranbaxy Laboratories Ltd. Vs. UoI 2011-TIOL-105-SC-CX wherein the Supreme Court held that the interest is to be granted from the expiry of three months from the date of filing of the initial refund claimed and not from the date of the order of the authority finally granting refund and as such bad in law?
The appeals are allowed. The order of the CESTAT dated 13 October 2017 is set aside.
Procedural History
Appellant filed refund applications in 2005-2007; adjudicating authority rejected claims; CESTAT allowed refunds on 10 February 2016; appellant filed refund applications on 15 March 2016; refund sanctioned on 31 March 2016; appellant claimed interest from initial claims; department granted interest from tribunal order; CESTAT by order dated 13 October 2017 held interest payable only after three months of filing refund applications after tribunal order; appellant filed appeals to High Court; High Court admitted appeals on substantial question of law and allowed them on 2 December 2022.
Acts & Sections
- Central Excise Act, 1944: 11BB
- CENVAT Credit Rules, 2004: Rule 5
