Bhilosa Industries Pvt. Ltd. Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Introduction: In the case of Bhilosa Industries Pvt. Ltd. vs. C.C.E. & S.T., the main issue revolves around the entitlement of interest on the sanctioned refund and the application of Section 11BB of the Central Excise Act, 1944.
Detailed Analysis: The crux of the matter lies in the timeline of the refund claim filed on 19.05.2005 and its sanction on 04.04.2016. Section 11BB mandates interest if the duty ordered to be refunded is not processed within three months from the application date. In this case, the Appellant claimed interest from 20-8-2005 to the actual payment date, 04-4-2016.
The CESTAT Ahmedabad’s analysis emphasizes the statutory obligation for the department to sanction refunds with interest after three months from the filing date. The key reference is Section 11BB, specifying that interest is payable from three months after the application date until the duty refund.
The appellant’s argument is supported by various legal precedents, including the Hon’ble Supreme Court’s judgment in the case of M/s. Ranbaxy Laboratories Ltd. vs. Union of India (2011) 273 E.L.T. 3 (S.C.).
Conclusion: The CESTAT Ahmedabad, considering the statutory mandate, legal precedents, and circulars, concludes that the appellant is entitled to statutory interest from 20-8-2005 to 04-4-2016. The judgment sets aside the impugned order and grants relief to Bhilosa Industries Pvt. Ltd.
This detailed article provides insights into the Bhilosa Industries Pvt. Ltd. vs. C.C.E. & S.T. case, highlighting the legal perspective, interpretation of Section 11BB, and the decisive factors leading to the CESTAT Ahmedabad’s ruling in favor of the appellant.
We find that the limited issue involved is that from which date the appellant is entitled for interest on the sanctioned refund. As per the facts of the present case, we find that there is no dispute about the fact that the refund claim had been filed on 19.05.2005 and the same was sanctioned only vide order-in-original both dated 04.04.2016. We also noticed that in the present matter both the adjudicating authority considered the letter dated 23.11.2015 as refund claim application, whereas vide letter dated 23.11.2015 appellant only informed the Jurisdictional Deputy Commissioner that CESTAT has passed order in their favour and accordingly to sanction the refund amount along with interest.
Section 11BB of Central Excise Act, 1944 clearly stipulates that if any duty is ordered to be refunded under sub-section (2) of Section 11B of the Act to the applicant and the same is not refunded within three months from the date of receipt of such application under sub-section (1) of Section 11B of the Act, then the applicant would be entitled to interest. This interest would be payable immediately after the expiry of three months from the date of receipt of such application till the date of refund of the duty. In a nutshell, what this section stipulates is that, once an application for refund has been made and the same is granted within a period of three months of receipt of such application, there would be no liability to pay interest. However, if the refund is granted after the expiry of the period of three months from the date of receipt of the application, then interest would also be payable on the amount of refund granted, from the date immediately after the expiry of three months from the date of receipt of such application, till the date of refund.
As per the statutory mandate of Section 11BB of the Act the department is under legal obligation to sanction the refund claim along with interest after the expiry of 3 months from the date of filing of the refund claim. In the present matter the time limit for payment of the refund amount to the Appellant by the Central Excise authorities (without interest) expired on 1908-2005. Since, claimed amount was finally paid to the Appellant on 04.04.2016, in our considered view, the Appellant is entitled for the statutory interest from 20-8-2005 to the date when the refund was eventually paid, i.e., 04-4-2016. Though, the refund amount was paid to the Appellant consequent upon the final order dated 08.05.2015 passed by the CESTAT, but the date of computation of the interest amount will commence from the date of cessation of three months of the original refund application, and not from the date, when the refund amount was finally paid.
We also observed that the issue in the present case regarding payment of interest on delayed refund amount is no more res integra in view of the judgment of Hon’ble Supreme Court delivered in the case of M/s. Ranbaxy Laboratories Ltd. Union of India, reported in 2011 (273) E.L.T. 3 (S.C.).
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
All these appeals are directed against the common impugned Order-in-Appeal No. CCSA-Audit-SRT/VK-67 to 68/2018-19 dated. 31.12.2018 passed by the Pr. Commissioner (Audit /Appeals) GST & Central Excise, Audit, Surat whereby the appeals for claims of interest on refund amount are rejected.
2. Briefly the facts of the present case are that the central excise officers visited the factory premises of the Appellant and found that Appellant had wrongly availed the exemption Notification No. 214/86 CE dated. 25.03.1986 and Appellant were required to pay duty amounting to Rs. 77,99,763/- and Rs.19,25,540/- for such wrong availment. Accordingly, the appellant deposited the amount of Rs. 35,00,000/- and of Rs. 15,00,000/- and credited the same in PLA account for payment of duty. But on ascertaining sufficient balance in Cenvat account, they debited the duty amount from cenvat account. Subsequently, the appellant filed the refund claim for the amount of Rs. 35,00,000/- and Rs. 15,00,000/- deposited in their PLA account lying unutilized due to inverted duty structure. The said refund claims were rejected by the Jurisdictional authority vide Order-In-Original both Dated. 04.08.2008. Being aggrieved, appellant filed appeal before the Commissioner (Appeals), Vapi, who vide Order-In-Appeal dated 28.12.2007 upheld the impugned order. Against the said Order-In-Appeal appellant filed appeal before the CESTAT and vide final order dated 08.05.2015 tribunal set aside the impugned orders and held that the appellant is eligible for the refund of unutilized balance in PLA.
3. Consequent upon the Tribunal’s final order the appellant vide letter dated. 23.11.2015 requested the department to sanction the refund claims of Rs.35,00,000/- & 15,00,000/- along with interest. The Adjudicating authority sanctioned both the refund claims without interest and conditionally, subject to the outcome of the decision of Hon’ble High Court of Mumbai in respect of appeal filed by department against the Tribunal ‘s order No. A/1094110942/2015 dated 08.05.2015. Being aggrieved, the appellant preferred the appeals before the Commissioner (Appeals) who vide impugned order rejected the appeals. Hence, against the denial of interest on delayed sanction of refund, the appellant is before us.
4. Prakash Shah, Learned Counsel appearing on behalf of the appellant submits that undisputedly the refund claims were duly sanctioned by the adjudicating authority which was filed on 19.05.2005 and not on 23.11.2015 as claimed by the adjudicating authority in impugned refund orders. The said refund claim which was filed originally on 19.05.2005 was sanctioned on 04.04.2016. As per the provisions of Section 11BB of Central Excise Act, 1944 the department is under legal obligation to sanction the refund claim along with interest after the expiry of 3 months from the date of filing of the refund claim. He placed reliance on the following Judgments:-
