R G Texin Mfg Company P Ltd vs C.C.E.-Delhi-Iii

(Arising out of OIA No. 126/CE/DLH/2014 dated 20.6.2014 passed by Commissioner of Central Excise (Appeal) Delhi-I)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

R G Texin Mfg Company P Ltd. Appellant

Vs.

C.C.E.-Delhi-III Respondent

Appearance:

Present for the Appellant: Shri Manjit Singh, Authorized Consultant

Present for the Respondent: Shri Ranjan Khanna, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No.52040/2015

Per: Sulekha Beevi C.S.

The appellants are engaged in the manufacture and export of Silencers for Diesel Engines. The appellants are also availing the facility of Cenvat credit under Cenvat Credit Rules 2004. The appellants are exporting their final goods and it is only the scrap generated during manufacture of Silencers that is cleared in the domestic market on payment of duty. This duty is paid from the Cenvat credit only. As the final goods are exported there was accumulation of unutilised Cenvat credit. The appellant filed a refund claim for Rs.28,728/- for the quarter ending March 2010 on 28/05/2010 for the unutilised accumulated balance of Cenvat Credit due to export of the final product. The refund claim was rejected by the Assistant Commissioner, Central excise, Gurgaon vide Order-in-Original dated 03/08/2010 on the ground that the appellants failed to utilise the Cenvat credit in accordance with the provisions of Rule 5 of Cenvat Credit Rules read with Notification No. 5/2006  CE (NT) dated 14/03/2006 and as such did not satisfy the condition.

2. Aggrieved by the said order, the appellants filed appeal before the Commissioner (Appeals), Delhi III who vide Order-in-Appeal dated 14/10/2011 allowed the refund claim with direction to the refund sanctioning authority to verify the correctness of the refund claim with original documents. The Assistant Commissioner, Gurgaon vide Order-in-Original dated 16/03/2012 rejected the refund claim on the ground that the appellant failed to produce documents to verify the correctness of the claim. Aggrieved by the said order the appellants again preferred appeal before the Commissioner (Appeals), Delhi-III. Thereafter vide Order-in-Appeal dated 23/10/2012 the Commissioner (Appeals) allowed the appeal directing the original authority to search for his records and locate the original documents already submitted by the appellants and sanction the refund claim.

3. The appellants were thus sanctioned the refund amount of Rs.28,728/ vide Order-in-Original dated 14/02/2013 and the amount of Rs.28,728/ was paid to the appellant through crossed cheque dated 13/02/2013. There was no order to pay interest to the appellant. As only the amount of refund claim was allowed without any interest the appellants preferred appeal before the Commissioner (Appeals). The appellants prayed to allow interest from 28/08/2010 under the provisions of the Central Excise Act, 1944. However, the Commissioner (Appeals) by the impugned order held that the appellant is entitled to interest upon the refund amount from 31/01/2013 only. Aggrieved by the denial of interest from 28/08/2010 the appellant has filed the present appeal.

4. The issue for consideration is whether the appellant is entitled to interest on the expiry of three months from the date of filing the application or on the expiry of this same period from the date on which the order of refund was made.

5. Undisputedly, the refund claim was filed by appellant on 28/05/2010. According to the appellant they are entitled to interest from 28/08/2010 onwards as per the provisions of law. The Commissioner (Appeals) has taken the view that as the appellant was sanctioned refund by the order in Appeal No. 426/SVS/ GGN/2012 dated 23/10/2012 the appellant is entitled to interest on expiry of three months from of the date of order i.e.; from 31/01/2013 onwards. The Commissioner (Appeals) has interpreted section 11BB of the Central Excise Act, 1944 and held that as the refund claim was sanctioned vide order dated 23/10/2012 and the same was hand-delivered along with the request letter dated 25/10/2012 by the appellant in the office of the respondent on 31/10/2012, the date of receipt of application for a refund has to be treated as 31/10/2012 and not as 28/05/2010.

6. The Authorized Representative for the appellant urged that the issue is no longer res intergra as the Apex Court in Ranbaxy Laboratories Ltd vs Union of India 2011 (273) ELT 3 (S. C.) has considered the issue as to the date on which the interest would be payable in a delayed refund claim. The Apex Court in the above decision has observed as under:

Interest on delayed refund is payable under Section 11BB of Central Excise Act, 1944 on the expiring of period of three months from the date of receipt of application under Section 11B(1) ibid and not from the date of order of refund or Appellate Order allowing such refund  Explanation to proviso to Section 11BB ibid introduces a deeming fiction that where order for refund is not made by Asstt. Commissioner/Dy. Commissioner, but by Appellate Authority, such appellate order shall be deemed to be an order under Section 11B(2) ibid  This explanation does not postpone the date from which interest becomes payable to under Section 11BB ibid  It is manifest from the provision of Section 11B of Central Excise Act, 1944.

It is further held

In view of the above analysis, our answer to the question formulated in para (1) supra is that 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.

7. It is not in dispute that the appellant had filed the claim for refund on 28/05/2010. Therefore as laid down by the Honble Supreme Court in the above decision the appellant is entitled to interest on the expiry of three months from the date of filing the application of refund. In such circumstances, the appellant herein is entitled to interest from 28/08/2010 to 14/02/2013 on which date the claim of refund was sanctioned/the crossed cheque was given.

8. From the foregoing, the appeal is allowed and the impugned order is modified to the extent of allowing interest to the appellant upon the refund amount of Rs.28,728/ from 28/08/2010 to 14/02/2013.

9. The appeal is accordingly allowed.

(Pronounced on 29.06.2015)

(Sulekha Beevi C.S.) Member (Judicial)

K. Gupta

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