Circular No.  670/61/2002-CX
1st Oct., 2002.

F.No. 268 /51/2002-CX-8

Government of India

Ministry of Finance & Company Affairs

Department of Revenue

Central Board of Excise & Customs

Subject: – Non-payment of interest in refund/ rebate cases which are sanctioned beyond three months of filing-  reg.

I am directed to invite your attention to provisions of section 11BB of Central Excise Act, 1944 that wherever the refund/ rebate claim is sanctioned beyond the prescribed period of three months of  filing of the claim, the interest thereon shall be paid to the applicant at the notified rate. Board has been receiving a large number of representations from claimants to say that interest due to them on sanction of refund/ rebate claims beyond a period of three months has not been granted by Central Excise formations. On perusal of the reports received from field formations on such representations, it has been observed that in majority of the cases, no reason is cited. Wherever reasons are given, these are found to be very vague and unconvincing. In one case of consequential refund, the jurisdictional Central Excise officers had taken the view that since the Tribunal had in its order not directed for payment of interest, no interest needs to be paid.

2. 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 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.

3. Field formations may please be informed suitably.

4. Receipt of the same may be acknowledged.

5. Hindi version will follow.

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