Order Date – 29 May 2023

Parties: M/s Champion Flavours, Meerut Vs Commissioner CGST, Jammu

Facts – 

• The Appellant, M/s Champion Flavours, Meerut, was engaged in the manufacturing of Menthol, Menthol Crystal’s and DMO and was availing area based exemption under Notification No. 56/2002 dated 14.11.2002.
• The appellant on 28.10.2010 filed refund claim on account of balance lying in their personal ledger account (PLA) which was pending unutilized due to withdrawal of duty vide Notification No. 10/2010-CE dated 27.02.2010. 
• The refund was sanctioned vide order dated 31.08.2020, but interest on delayed payment of refund claim was not sanctioned.

Issue –

• Whether the appellant is entitled to interest on delayed refund?

Order –

• The Tribunal observed that the appellant is entitled to interest on the delayed refund in view of the judgement of the Hon’ble Apex Court in the case of Ranbaxy Laboratories Ltd. vs. UOI wherein it was held 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 application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.
• Further, the appellant has filed the refund claim on 28.10.2010 which was finally sanctioned on 31.08.2020 but no interest was granted. Further, as per Section 11BB of the Act, the interest is payable after the expiry of 3 months from the date of receipt of application.
• Therefore, in this case, the appellant is entitled to interest on delayed payment from 27.01.2011 to till date of credit to the account of the appellant at the rate of 6% as per the statute.