BOMBARDIER TRANSPORTATION INDIA PVT LTD VERSUS C.C.E. & S.T.-VADODARA-II

Service Tax Appeal No.10840 of 2022

(Arising out of OIA-VAD-EXCUS-002-APP-165-2022-23 dated 02/08/2022 passed by

Commissioner of Central Excise, Customs and Service Tax-VADODARA-II)

 

BOMBARDIER TRANSPORTATION INDIA PVT LTD

VERSUS

C.C.E. & S.T.-VADODARA-II

 

APPEARANCE:

Shri Mrugesh Pandya, Advocate for the Appellant

Shri Tara Prakash, Assistant Commissioner (AR) for the Respondent

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

HON’BLE MEMBER (TECHNICAL), MR. RAJU

Final Order No. A/ 10191 /2023

DATE OF HEARING: 10.01.2023

DATE OF DECISION: 01.02.2023

RAMESH NAIR

The issue involved in the present case is that whether the appellant is

entitled for the interest on refund already sanctioned.

2. Shri Mrugesh Pandya, learned counsel appearing on behalf of the

appellant submits that the learned Commissioner (Appeals) has taken the

date of refund application as a letter dated 22.02.2022 submitted for refund

of service tax and applicable interest whereas, the refund application was

filed on 13.06.2011 which was rejected and the matter travelled up to this

tribunal. The Tribunal vide order No. A/12474/2021 dated 07.10.2021 on the

very refund matter allowed the appeal accordingly, the refund was

sanctioned which was filed way back on 13.06.2011. He submits that it is 

settled law that the interest shall be payable after three months from the

date of filing of refund application. Therefore for the appellant is legally

entitled for the interest after expiry of three months from the date of filing

refund claim which in the present case is 13.06.2011. He placed reliance on

the following judgments:-

 M/s. Ranbaxy Laboratory Ltd.- 2011 (273) ELT 3 (S.C.)

 Manish Pharmo Plast Pvt. Ltd.- 2020 (374) ELT 145 (S.C.)

 Harmdard (WAQF) Laboratories- 2013 (333) ELT 193 (S.C.)

 Tata Chemicals Ltd.- 2016 (334) ELT 133 (Tri.-Ahmd.)

 Tata Chemicals Ltd.- 2016 (334) ELT A53 (Guj.)

 M/s. Comparex India Pvt. Ltd.- 2022 (11) TMI 2- CESTAT NEW DELHI

 Reliance Industries Ltd.- vide order No.A/11315-11316/2022 dated

31.10.2022

 Vikram Plastics- 2019 (370) ELT 1635 (Tri.-Ahmd.)

3. Shri Tara Prakash, learned Assistant Commissioner (AR) appearing on

behalf of the revenue reiterates the finding of the impugned order.

4. On careful consideration of the submission made by both the sides and

perusal of records, we find that there is no dispute that the appellant had

initially filed the refund application on 13.06.2011. It is this refund claim

which was rejected by the sanctioning authority and the matter had travelled

up to this Tribunal. This tribunal vide order No. A/12474/2021 dated

07.10.2021 allowed the appeal of the appellant. Consequent to this order,

the sanctioning authority has granted the refund, however, the interest was

not allowed. Learned Commissioner (Appeals) in the appellant’s appeal

before him rejected the claim of interest on the ground that the appellant

have claimed the refund after the tribunal’s order vide letter dated

22.02.2022 therefore, the refund was sanctioned within three months from

that date. The learned Commissioner (Appeals) also interpreted the 

provision of Section 11BB of the Central Excise Act, 1944 and the circulars in

this context. After consideration of the finding of the learned Commissioner

(Appeals). We find that the learned Commissioner (Appeals) has gravely

erred in misinterpreting the overall provision and clarification of board

circular. The provision of Section 11BB is very clear, according to which the

claimant shall be entitled for the interest after expiry of three months from

the date of refund application. In the present case, the refund application

was admittedly filed on 13.06.2011 and it is this case which was under

litigation up to the tribunal and subsequently, the appellant succeeded in

this refund case only. In this case, the refund application was filed on

13.06.2011 shall be treated as refund application as mentioned under

Section 11BB.

4.1 As per the tribunal order, the appellant stand entitled for the refund

right from the date of application i.e. 13.06.2011 accordingly, the appellant

is legally entitled for the interest after the expiry of three months from the

date of refund application i.e. 13.06.2011. The judgment of Hon’ble

Supreme Court in the case of M/s. Ranbaxy Laboratory Ltd (supra) is directly

applicable in the facts of the present case. The relevant para of the said

judgment is reproduced below:-

9. 9. It is manifest from the afore-extracted provisions that Section 11BB

of the Act comes into play only after an order for refund has been made

under Section 11B of the Act. Section 11BB of the Act lays down that in

case any duty paid is found refundable and if the duty is not refunded

within a period of three months from the date of receipt of the

application to be submitted under sub-section (1) of Section 11B of the

Act, then the applicant shall be paid interest at such rate, as may be

fixed by the Central Government, on expiry of a period of three months

from the date of receipt of the application. The Explanation appearing

below Proviso to Section 11BB introduces a deeming fiction that where

the order for refund of duty is not made by the Assistant Commissioner

of Central Excise or Deputy Commissioner of Central Excise but by an

Appellate Authority or the Court, then for the purpose of this Section the

order made by such higher Appellate Authority or by the Court shall be

deemed to be an order made under sub-section (2) of Section 11B of

the Act. It is clear that the Explanation has nothing to do with the

postponement of the date from which interest becomes payable under 

Section 11BB of the Act. Manifestly, interest under Section 11BB of the

Act becomes payable, if on an expiry of a period of three months from

the date of receipt of the application for refund, the amount claimed is

still not refunded. Thus, the only interpretation of Section 11BB that can

be arrived at is that interest under the said Section becomes payable on

the expiry of a period of three months from the date of receipt of the

application under sub-section (1) of Section 11B of the Act and that the

said Explanation does not have any bearing or connection with the date

from which interest under Section 11BB of the Act becomes payable.

From the plain reading of the above observation of the Hon’ble Supreme

Court, we do not find any ambiguity on the position that if the refund is not

sanctioned within three months from the date of filing, the appellant is

entitled for the interest on the refund sanctioned. Accordingly, we are of the

considered view that in the present case also the appellant is legally entitled

for the interest on refund.

5. Accordingly, the impugned order is set aside. Appeal is allowed.

(Pronounced in the open court on 01.02.2023 )

(RAMESH NAIR)

MEMBER (JUDICIAL)

(RAJU)

MEMBER (TECHNICAL)