[2016-TIOL-1974-CESTAT-MUM] Raymond Ltd vs. Commissioner of Central Excise & Customs, Nashik

Facts
The Appellant paid service tax following a show cause notice issued. The adjudicating authority dropped the demand and after protracted recourse to appeal and review, the Tribunal also accorded finality to non-taxability. The refund claim filed was allowed but the amount sanctioned was transferred to the fund on the ground of “unjust enrichment”. On appeal the first appellate authority allowed the refund to be paid but claim for interest was rejected. Accordingly the present appeal is filed.

Held
The Tribunal noted that section 11BB of Central Excise Act, 1944 is unambiguously clear that non-sanction of refund within three months of filing of claim will set the “interest clock” ticking. Mere pendency of any appellate/ revisionary proceedings cannot justify non-sanction of such refunds. The law does not acknowledge recoveries to any such excuse or loopholes. Section 11BB is intended to ensure accountability on the part of revenue officials and if interest legally provided for in the law is not granted, it tantamounts to defying legislative intent. It was observed that wrongful collection of tax was known since the date of adjudication order and therefore there is no justification to hold back the wrongly credited amount. Accordingly appeal was allowed with a direction to immediately release the interest due on receipt of the order.

Note: Readers may also the note the decision in the case of CCE & ST vs. Ghatge Patil Industries Ltd [2016-TIOL-1970- CESTAT-MUM] holding that even though the amount became refundable after Tribunal order, the interest shall be payable for the period from three months of the date of application till the date of sanction of refund. Reference can also be made to a similar decision of the Bombay High Court in the case of Tahnee Heights Co-op Housing Society Ltd vs. The Union of India & ORS [2015-TIOL-1828-HC-MUM-ST] digest reported in the October 2015 issue of BCAJ.