The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld the eligibility of Capita India Pvt Ltd, the appellant for interest on delayed sanction of refund claim under Rule 5 of Cenvat Credit Rules, 2004.
The appellant is engaged in the provision of business support service to its customer located outside India which qualifies as export under the Service Tax Rules, 1994. The appellant exported the service without payment of any Service Tax. In terms of Rule 5 of CCR with notification 27/2012-CE(NT) dated 18.06.2012 the appellant claimed refund of Cenvat Credit accumulated on account of the export of services for the period April, 2013 to September, 2015.
The refund claims were partly allowed by the Adjudicating Authority and thereafter some of them by the Appellate Authority and the Tribunal granted remaining part of the refund which has been rejected by the Appellate Authority.
On an application being filed by the appellant with the Adjudicating Authority, requesting for the refund that was allowed by the Tribunal, the amount was sanctioned by the said authority. However, the said authority failed to pay any interest on the delayed sanction of refund under section 11BB of Central Excise Act, 1944 despite the refunds being sanctioned beyond the period of three months from the date of filing of refund application.
Aggrieved the appellant filed appeal before the Commissioner and rejected the appeal by observing that the refund involved herein is not in the nature of any duty/tax paid by the appellant which was found refundable under section 11B of the Central Excise Act, 1944.
The Tribunal of Ajay Sharma, Judicial Member relied on the judgment in Ranbaxy Laboratories Ltd and observed that “The Commissioner is not correct in his view and he lost sight of the position of law that refund under Rule 5 also being a refund under section 11B would squarely fall within the ambit of Section 11BB and interest is payable in case of delay in sanctioning the refund under Rule 5 of CCR.”
The Tribunal expressed its grief by stating that “The Commissioner seems to be not aware of the Principle of Judicial Discipline and in particular Article 141 of the Constitution of India, which provides that the decisions of the Hon’ble Supreme Court are binding on all the Courts in India and “all Courts” includes quasi-judicial authorities also, therefore he ought to have followed the law laid by the Supreme Court in Ranbaxy Laboratories Ltd.”
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