Order date – 02 December 2022

 Facts –

• The Appellant, M/s Lavino Kapur Cotton Pvt Ltd filed four refund applications for refund of duty under the provision of Rule 5 of the CENVAT Credit Rules, 2004, on various dates in 2005, 2006 and 2007.
• Initially the refund claim was rejected by the adjudicating authority, however the Assistant Commissioner of Central Excise gave refund to the Appellant in June 2016 but interest under Section 11BB of the Central Excise Act, 1944 was rejected.
• Being aggrieved the appellant had filed an appeal.

Issue –

• Whether the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of the application for refund under Section 11B(1) of the Act or the date on which the Order of refund is made ?

Order –

• The Hon’ble High Court finds that as per Section 11BB, payment of interest on delayed refund beyond the period of three months from the date of receipt of an application under sub-section (1) of Section 11B. 
• It is also clear that order of refund is made by the Commissioner of Appeals, the Appellate Tribunal or any Court against an Order of the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under sub-section (2) of Section 11B, such an Order would be deemed to be an Order passed under the said sub-section (2) of Section 11B for the purposes of Section 11BB, that is payment of interest on delayed refund.
• Therefore, interest would be liable to be paid in terms of Section 11BB on delayed refund as if it was an Order passed under sub-section (2) of Section 11B if the amount was not refunded within three months from the date of receipt of the application under sub-section (1). This issue, even, is no longer res integra.
• The appeal is allowed.