Liability to Pay Interest u/s 11BB of CEA Commences from Date of Expiry of 3 Months from Date of Receipt of Application for Refund: CESTAT [Read Order]

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the liability to pay interest under Section 11BB of the Central Excise Act, 1944 ( CEA ) commences from date of expiry of 3 months from date of receipt of application for refund.

The appeal was filed by the Revenue against order passed by the Commissioner ( Appeals ) Central Goods & Services Tax. No record was there with the office that the assessee made application for refund in statutorily prescribed format addressed to the competent authority, that is, jurisdictional Assistant Commissioner which was duly acknowledged and subsequently reflected in the pendency of the division as reported in the Monthly Technical Report ( MTR ) which is strictly monitored by higher authorities for any refund pending for more than 3 months.

The Revenue contended that in the subject case, the refund of Rs.1,11,11,941/- is being sanctioned to the party within the stipulated period of three months, hence interest is not applicable to the party in the instant case.

Section 11BB of the Central Excise Act, 1944 was inserted w.e.f. 26.05.1995 by Section 75 of the Finance Act, 1995 (22 of 1995). Prior to that, there was no provision for the interest in the law. The refund claim of the party pertains to the period 14.05.1986 to 30.06.1990 i.e. prior to the insertion of the Section 11BB and this insertion does not indicate whether these provisions have retrospective effect. Hence, interest is not applicable to the party.

A Two-Member Bench comprising PK Choudhary, Judicial Member and Sanjiv Srivastava, Technical Member observed that “We are very clear that there is no dispute that this order was in respect of a refund application filed on 07.04.1997. If Revenue was aggrieved by the facts as recorded in this order, they should have filed an application under Section 35 C (2) of the Central Excise Act, 1944 for getting the facts as recorded in the final order of tribunal or could have filed an appeal to the concerned appellate authority. Having not done so there cannot be any dispute about the fact that entire proceedings are in respect of the refund application filed on 07.04.1997. Commissioner ( Appeals ) findings in this regard cannot be faulted with.”

“As the entire issue is in sequel of the Tribunal order directing payment of due interest as due. Without challenging the direction to pay the interest at appropriate forum the same cannot be challenged in these proceedings whether for the period prior insertion of the Section 11BB before or after, we do not find any merits in this appeal” the Bench noted.

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