Order Date – 23 June 2023

Parties: M/s. SRF Ltd. Vs Commissioner of GST & Central Excise

Facts – 

• The Appellants, M/s. SRF Ltd. filed a refund claim on 05/10/2018 consequent to Tribunal’s Final Order dated 13.8.2018 allowing their appeal. The department alleged that the appellant was liable to pay appropriate interest on the said credit reversed by them. 
• The appellant also vide their letter dated 04/03/2019 stated that they are also entitled to interest under Section 11BB of the Central Excise Act 1944, subsequently the appellant vide letter dated 15/05/2019 (received in the office on 21.5.2019) have informed the department that they have paid the interest.
• The adjudicating authority on 29.8.2019 sanctioned refund amount being the CENVAT credit reversed under protest. However, the adjudicating authority rejected an amount claimed towards interest as ineligible in terms of Section 11BB of the Act. On an appeal field by the appellant the Commissioner (Appeals) hold that the appellant would be eligible for interest after a lapse of three months from 21.5.2019 i.e. the date of filing the revised refund claim.

Issue – 

• Whether the relevant date for calculating interest is payable is from the date of filing the original claim?

Order – 

• The Tribunal observed that CENVAT credit paid was ordered to be refunded to the applicant as a consequential benefit by Hon’ble CESTAT’s Final Order dated 13/08/2018. The same should have been refunded within three months from the date of receipt of application under sub-section (1) of that section 11B of the Act, which was 05/10/2018. The interest clock would start ticking from that date.
• Hence the liability of the Proper Officer to pay interest 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, as stated under Section 11BB of the Act and not from the date of reversal of credit under protest as sought by the appellant or the date of filing the revised claim as per the impugned order. 
• Further this is not a case where the refund was delayed by the appellant for want of critical documents that would be necessary to quantify the refund. It was mainly because the department wanted the appellant to pay the interest amount due first, which could very well have been adjusted by the department from their refund claim as consented by the appellant.
• Thus, it was held that the relevant date for calculating interest commences from the date of expiry of three months from the date of receipt of application for refund by the department i.e. from 05/10/2018 in terms of Section 11BB of the Central Excise Act, 1944. The appeal is disposed off accordingly.