Facts of the Case

This case concerns interest on delayed refund under the pre-GST Central Excise Act, 1944, not the GST regime — though the appellant department is now styled as the 'Commissioner of GST and Central Excise' following the administrative reorganisation after GST's introduction. The appeal was filed by the Commissioner of GST and Central Excise, Dibrugarh, challenging a judgment and final order dated 25.04.2022 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, in Excise Appeal No. 75842/2015.

CESTAT had allowed the respondent-assessee's claim for interest on delayed payment of a refund under Section 11BB of the Central Excise Act, 1944, directing the Revenue to pay interest calculated from three months after the date of filing the refund application, within two months from the date of that order.

The only ground urged by the Revenue in this appeal was that the question of entitlement to interest under Section 11BB was pending before the Supreme Court in the case of M/s Dharampal Satyapal Limited.

Issues Involved

  1. Whether the pendency of a similar question before the Supreme Court in a different case justified interference with the CESTAT order granting interest under Section 11BB.
  2. From what date interest on delayed refund under Section 11BB becomes payable.

Petitioner's (Revenue's) Arguments

  • The issue of entitlement to interest on delayed payment of refund under Section 11BB was pending consideration before the Supreme Court in M/s Dharampal Satyapal Limited, and the CESTAT order should not be given effect pending that outcome.

Respondent's Arguments

  • No appearance was made on behalf of the respondent-assessee; the Court proceeded on the basis of the settled legal position and its own precedent.

Court Order / Findings

  • The Court noted that counsel for the Revenue could not dispute that the Supreme Court in Ranbaxy Laboratories Limited v. Union of India & Ors. [2011 (10) SCC 292] had already settled that liability to pay interest under Section 11BB commences from the expiry of three months from the date of receipt of the refund application, not from the date of the refund order — so the issue was no longer res integra.
  • The Court also noted that it had itself decided a batch of similar appeals (led by Writ Appeal No. 102/2022 and Central Excise Appeal No. 3/2022), affirming CESTAT's orders in favour of assessees on identical facts, subject to the assessee furnishing an undertaking to refund the interest if the Revenue eventually succeeded before the Supreme Court in the Dharampal Satyapal matter.
  • Following this consistent approach, the Court dismissed the Revenue's appeal, directing the respondent-assessee to furnish a similar undertaking, and directed payment of interest on the delayed refund within two months.

Important Clarification

This is a pre-GST Central Excise Act matter (the disputed refund and interest relate to Excise Appeal No. 75842/2015, decided by CESTAT in 2022). It applies settled Supreme Court law on Section 11BB interest and does not interpret any provision of the CGST Act, 2017. Businesses should note the department involved is now titled 'GST and Central Excise' only because of administrative restructuring — the substantive law applied is entirely Central Excise Act law.

Sections Involved

  • Section 11B and Section 11BB of the Central Excise Act, 1944
  • Section 35G of the Central Excise Act, 1944 (appeal to High Court from CESTAT order)

Decision – In Favour of

Decided in favour of the respondent-assessee — the Revenue's appeal was dismissed and the CESTAT order granting interest under Section 11BB was upheld, subject to the assessee furnishing an undertaking.

Case Details

Court: Gauhati High Court (High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)
Case No.: Case No. C.Ex.App./7/2022
CNR: GAHC010255432022
Coram: Hon'ble the Chief Justice and Hon'ble Mrs. Justice Susmita Phukan Khaund
Date of Order: 14.08.2023

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