Order Date- 10 June 2022

Facts:

• The Appellant Bhilosa Industries Pvt Ltd had wrongly availed the exemption Notification No. 214/86 CE dated. 25.03.1986 and Appellant were required to pay duty amounting to Rs. 77,99,763/- and Rs.19,25,540/- for such wrong availment.
• The appellant deposited the amount of Rs. 35,00,000/- and of Rs. 15,00,000/- and credited the same in PLA account for payment of duty. But on ascertaining sufficient balance in Cenvat account, they debited the duty amount from cenvat account.
•  Subsequently, the appellant filed the refund claim for the amount of Rs. 35,00,000/- and Rs. 15,00,000/- deposited in their PLA account lying unutilized due to inverted duty structure. The said refund claims were rejected by the Jurisdictional authority vide Order-In-Original both Dated. 04.08.2008. Being aggrieved, appellant filed appeal before the Commissioner (Appeals), Vapi, who vide Order-In-Appeal dated 28.12.2007 upheld the impugned order. Against the said Order-In-Appeal appellant filed appeal before the CESTAT and vide final order dated 08.05.2015 tribunal set aside the impugned orders and held that the appellant is eligible for the refund of unutilized balance in PLA.
• The Tribunal’s final order the appellant vide letter dated. 23.11.2015 requested the department to sanction the refund claims of Rs.35,00,000/- & 15,00,000/- along with interest. The Adjudicating authority sanctioned both the refund claims without interest and conditionally, subject to the outcome of the decision of Hon’ble High Court of Mumbai in respect of appeal filed by department against the Tribunal ‘s order No. A/10941-10942/2015 dated 08.05.2015. Being aggrieved, the appellant preferred the appeals before the Commissioner (Appeals) who vide impugned order rejected the appeals. Hence, against the denial of interest on delayed sanction of refund.

Issue:

• From which date the appellant is entitled for interest on sanctioned amount?

Order:

• The Tribunal observed that as per the facts of the present case, it is found that there is no dispute about the fact that the refund claim had been filed on 19.05.2005 and the same was sanctioned only vide order-in-original both dated 04.04.2016. It is also noticed in the present matter that both the adjudicating authority considered the letter dated 23.11.2015 as refund claim application, whereas vide letter dated 23.11.2015 appellant only informed the Jurisdictional Deputy Commissioner that CESTAT has passed order in their favour and accordingly to sanction the refund amount along with interest.
• As per the statutory mandate of Section 11BB of the Act the department is under legal obligation to sanction the refund claim along with interest after the expiry of 3 months from the date of filing of the refund claim. The Appellant is entitled for the statutory interest from 20-8-2005 to the date when the refund was eventually paid, i.e., 04-4-2016. Though, the refund amount was paid to the Appellant consequent upon the final order dated 08.05.2015 passed by the CESTAT, but the date of computation of the interest amount will commence from the date of cessation of three months of the original refund application, and not from the date, when the refund amount was finally paid.
• The impugned order is not sustainable, hence the same is set aside and appeals filed by the appellant are allowed with consequential relief.