Case Note & Summary
The writ petition arose from a dispute over statutory interest on a refund of Central Excise duty. The petitioner, an assessee, had filed an original refund application under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 on 20 May 2015. The claim was ultimately allowed by the Appellate Tribunal by order dated 8 December 2025. The respondent Commissioner thereafter paid the principal refund amount of Rs. 53,05,173 on 23 June 2026 but denied interest from the expiry of three months from the original application date, contending that interest ran only from the date of the Appellate Tribunal order or from the later communication. The petitioner challenged the order-in-original dated 24 March 2026 passed by respondent No.3 to the extent it denied statutory interest under Section 11BB of the Central Excise Act, 1944 read with Section 83 of Chapter V of the Finance Act, 1994. The petitioner argued that the communication dated 5 January 2026 was merely a continuation or reminder of the original claim and that interest was payable from 20 August 2015, i.e., three months after the original application, till the date of actual refund. The respondents contended that the refund claim arose only after the CESTAT order dated 8 December 2025 and that the assessee filed a fresh refund application by letter dated 5 January 2026; therefore, interest under Section 11BB was payable only if the refund was not made within three months from the date of that claim. The High Court examined Sections 11B and 11BB of the Central Excise Act, 1944 and Section 83 of the Finance Act, 1994, and applied the binding Supreme Court decision in Ranbaxy Laboratories Ltd v. Union of India. The Supreme Court had held that interest under Section 11BB becomes payable on expiry of three months from the date of receipt of the application under Section 11B(1), and the Explanation to Section 11BB does not postpone that date; it only deems an appellate order to be an order under Section 11B(2). The High Court found that respondent No.3 committed a serious error in treating the communication dated 5 January 2026 as a fresh refund claim, because the original application was already pending and the later communication was only a continuation/reminder. Consequently, the petition was allowed; the order dated 24 March 2026 denying interest was quashed and set aside; and respondent No.3 was directed to pay statutory interest on Rs. 53,05,173 from 20 August 2015 till 23 June 2026 within eight weeks.
Headnote
A) Central Excise - Refund Interest - Commencement of Interest under Section 11BB - Central Excise Act, 1944, Sections 11B, 11BB - The court considered whether statutory interest on refund runs from expiry of three months from date of original refund application or from date of favourable appellate order. Following Ranbaxy Laboratories Ltd v. Union of India, 2011 (273) E.L.T. 3 SC, the court held that interest becomes payable on expiry of three months from date of receipt of application under Section 11B(1) and the Explanation to Section 11BB does not postpone that date. Held that interest was payable from 20 August 2015, not from Appellate Tribunal order dated 8 December 2025. (Paras 7-8)
B) Central Excise - Refund Application - Communication as Continuation/Reminder - Central Excise Act, 1944, Section 11B - The court held respondent No.3 erred in treating communication dated 5 January 2026 as a fresh refund claim; the original application filed on 20 May 2015 was pending and the later communication was only a continuation/reminder. Held that interest must be computed from original application date. (Paras 8-9)
Issue of Consideration
Whether statutory interest under Section 11BB of Central Excise Act, 1944 is payable from expiry of three months from date of original refund application or from date of favourable Appellate Tribunal order; and whether communication dated 5 January 2026 is a fresh refund claim or continuation/reminder.
Final Decision
Petition allowed. Order dated 24 March 2026 passed by respondent No.3 denying statutory interest quashed and set aside. Respondent No.3 directed to pay statutory interest on Rs.53,05,173 from 20 August 2015 till date of actual refund i.e. 23 June 2026 within eight weeks from date of order.
Law Points
- interest under Section 11BB of Central Excise Act
- 1944 payable on expiry of three months from date of receipt of application under Section 11B(1)
- Explanation to Section 11BB does not postpone interest commencement
- communication after appellate order may be continuation/reminder of original claim
- interest payable from original application date not appellate order date
Case Details
2026 LawText (BOM) (09) 25
Writ Petition No. 3460 of 2026
M.S. Karnik, Sandesh D. Patil
Mr. Jas Sanghavi for Petitioner; Mr. Satyaprakash Sharma with Ms. Kavita Shukla, Ms. Vaishali Malekar & Mr. Gaurav Gupta for Respondent Nos.1 to 3
Empire Industries Limited
1. Union of India, through its Secretary, Ministry of Finance, Department of Revenue; 2. The Commissioner of CGST, Mumbai Central Commissionerate; 3. The Assistant Commissioner Division III, CGST & CX, Mumbai
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition challenging order-in-original denying statutory interest on refund under Central Excise Act, 1944 and Finance Act, 1994.
Remedy Sought
Petitioner sought quashing of order dated 24 March 2026 to the extent it denied interest and direction to pay statutory interest from 20 August 2015 till 23 June 2026.
Filing Reason
Respondent No.3 construed communication dated 5 January 2026 as refund claim and denied interest from expiry of three months from original application date, contrary to Section 11BB and Supreme Court precedent.
Previous Decisions
Original refund application filed 20 May 2015; Appellate Tribunal allowed claim on 8 December 2025; respondent No.3 passed order-in-original dated 24 March 2026 denying interest.
Issues
Whether statutory interest under Section 11BB of Central Excise Act, 1944 is payable from expiry of three months from date of original refund application or from date of Appellate Tribunal order?
Whether communication dated 5 January 2026 constituted a fresh refund claim or was merely a continuation/reminder of original claim?
Submissions/Arguments
Petitioner: original refund application filed on 20 May 2015 under Section 11B of Excise Act r/w Section 83 of Finance Act; claim allowed by Appellate Tribunal on 8 December 2025; communication dated 5 January 2026 only continuation/reminder, not refund claim; interest payable from 20 August 2015 till refund date 23 June 2026.
Respondent: refund claim arises from CESTAT order dated 8 December 2025; refund application filed by assessee via office letter dated 5 January 2026; interest under Section 11BB payable only if refund not paid within three months from date of refund order; petition to be dismissed.
Ratio Decidendi
Under Section 11BB of Central Excise Act, 1944, interest on refund becomes payable on expiry of three months from date of receipt of application under Section 11B(1), not from date of favourable appellate order; the Explanation to Section 11BB only deems appellate order to be order under Section 11B(2) but does not postpone interest start date; communication after appellate order may be continuation/reminder of original claim if original application was pending.
Judgment Excerpts
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.
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.
The respondent No.3 committed a serious error in construing that the communication dated 5th January, 2026 was a refund claim. The original refund application under Section 11B of the Excise Act r/w Section 83 of the Finance Act was filed on 20th May, 2015.
The respondent No.3 is directed to pay statutory interest on the amount of Rs.53,05,173/- from 20th August, 2015, till the date of actual refund i.e. 23rd June, 2026, within a period of eight weeks from the date of passing of this order.
Procedural History
Original refund application filed on 20 May 2015 under Section 11B of Central Excise Act, 1944 r/w Section 83 of Finance Act, 1994. Appellate Tribunal allowed claim vide order dated 8 December 2025. Petitioner sent communication dated 5 January 2026 as continuation/reminder. Respondent No.3 passed order-in-original dated 24 March 2026 denying statutory interest. Petitioner filed Writ Petition No. 3460 of 2026 before Bombay High Court. Reserved on 2 September 2026, pronounced on 7 September 2026, corrected on 17 September 2026.
Acts & Sections
- Central Excise Act, 1944: Section 11B, Section 11BB
- Finance Act, 1994: Section 83, Chapter V
