Interest on Delayed Excise Refund Runs From Original Application Date: Calcutta HC

Commissioner of CGST and CX Kolkata South Commissionerate Vs Electrosteel Casting Limited (Calcutta High Court)

Summary: The Calcutta High Court considered the Revenue’s appeal under Section 35G of the Central Excise Act, 1944 against a CESTAT direction requiring payment of 9% compensatory interest on a refund claimed by M/s. Electrosteel Castings Limited. The dispute arose from service tax paid on a turnkey drinking water supply and distribution project for the Kerala Water Authority. The respondent had filed two refund claims under Section 11B, the first on January 5, 2012 for Rs.15,23,691/- and the second on March 20, 2012 for Rs.2,05,01,047/-. The second claim was returned as time-barred and the first was rejected after a show cause notice. The Tribunal subsequently set aside the rejections on August 9, 2024 and directed sanction of the refunds. After an implementation request, deficiency memo and submission of additional documents, the Assistant Commissioner sanctioned the total principal refund stated in the judgment as Rs.2,25,24,738/- on January 6, 2025, but without interest. The CESTAT thereafter exercised Rule 41 powers and directed payment of 9% interest calculated from three months after the original 2012 refund applications. The Revenue challenged both the Tribunal’s jurisdiction and the interest direction.