THEMIS AGENCIES Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE appellants herein had availed Modvat credit of Rs. 4,59,410/ - on their final products received back after export from their customers without obtaining permission for re -importation and return of goods to their factory premises under Rule 173 MM of erstwhile Central Excise Rules, 1944. Therefore, a show cause notice dated 10 -11 -97 was issued demanding the above mentioned amount of duty, which notice was confirmed by the Asstt. Commissioner vide Order -in -Original dated 18 -9 -1998. The appellants had paid the amount vide TR 6 challan dated 19 -12 -1997 even before the adjudication of the notice, and claimed the refund in April 1998 which was rejected by the Asstt. Commissioner vide Order -in -Original dated 5 -10 -1998. Vide Order No. CIV/1156/ WZB/04 dated 18 -3 -2004, the Tribunal held that the assessees were entitled to Modvat credit. The appellants filed a refund claim on 5 -5 -2004 under the provisions of Section 11B of the Central Excise Act, 1944, which was sanctioned to them by order dated 27 -7 -2004 and paid by cheque dated 29 -7 -2004. After receipt of the refund amount, the assessees filed an application for interest on the amount refunded, for the period 19 -12 -1997 (the date of payment of amount) to 29 -7 -04. The interest claim was rejected by the order dated 10 -2 -2005 of the Dy. Commissioner on the ground that refund amount was paid in July, 2004 which is well within the period of 3 months of the Tribunal's order, and interest would be payable only if the refund was not sanctioned and paid within 3 months from the Tribunals order. The Commissioner (Appeals) upheld the rejection of the claim for refund; hence this appeal.

(2.) I have heard both sides. As per the provisions of Section 11BB, the relevant date for commencement of accrual of interest is the date immediately after expiry of 3 months from the receipt of the application for refund. The explanation to the Section only clarifies that any order of refund made by the Commissioner (Appeals), Appellate Tribunal or any court shall also be deemed to be an order for refund, for the purpose of grant of interest. In the present case, the refund was not made before the expiry of 3 months from the date of receipt of the application for refund viz. December, 1997 and therefore, the refund made to the appellants is to be construed as a delayed refund and hence the appellants are entitled to interest, in the light of the decision of the Larger Bench of the Tribunal in the case of Rama Vision Limited v. CCE, Meerut and Larger Bench decision in the case of Jayanta Glass Ltd. v. CCE, Kolkata . The decision of the Tribunal in Coronation Spinning v. CC Kolkata which has been relied upon by the Commissioner (Appeals) to hold that the appellants are not entitled to interest, is not applicable to the facts of the present case.

(3.) IN the light of the above discussion, I hold that the appellants are entitled to interest from July 1998 on the delayed refund, and thus set aside the impugned order and allow the appeal with consequential relief.