2010 (12) TMI 162 - AT - Central Excise

Refund - The appellant cleared the goods by paying duty at 60% advalorem instead of at 42% advalorem Initially refund was sanctioned Tribunal ordered against the assesee Interest - In the case of Divis Laboratories Ltd. Vs. CC & CE (A-III) Hyderabad - (2009 -TMI - 75106 - CESTAT BANGALORE) had taken a view that the assessee is liable to pay interest under Section 11AB for the erroneous refund till the date of the amount paid back to the revenue - A combined reading of Section 11A(2B) and Section 11AB(1) makes it abundantly clear that even when the assessee voluntarily pays the erroneous sanctioned refund he is liable to pay interest in terms of Section 11AB Appeal is rejected

Summary

Issues:
1. Refund claim of excess duty paid by the appellant.
2. Liability of the appellant to pay interest on the erroneously refunded amount.

Analysis:
1. The appellant, a manufacturer of unmanufactured tobacco, filed a refund claim for excess duty paid during a specific period. The Adjudicating Authority initially sanctioned a refund of Rs.57,750, which was later challenged by the revenue. The Commissioner (Appeals) dismissed the appeal by the revenue, but the CESTAT allowed the department's appeal, directing the appellant to pay back the refund amount to the Consumer Welfare Fund. The Adjudicating Authority confirmed the demand of interest on the refunded amount, leading to an appeal by the appellant against the interest liability.

2. The main issue revolved around the liability of the appellant to pay interest on the erroneously refunded amount. The appellant argued that since they paid back the amount after the Tribunal's decision, they should not be liable for interest. However, the Tribunal referred to Section 11AB, which mandates interest payment on delayed duty refunds. The Tribunal highlighted that even voluntary repayment of an erroneously refunded amount attracts interest under Section 11AB. The appellant's argument regarding the absence of a show cause notice was dismissed, emphasizing the statutory obligation to pay interest without awaiting such notice. The Tribunal also differentiated between Single Member Bench and Division Bench decisions, upholding the latter's precedence.

3. The Tribunal concluded that the appellant was indeed liable to pay interest on the erroneously refunded amount, as per the provisions of Section 11AB. The decision in the case of Divis Laboratories Ltd. was cited to support this stance. The Tribunal emphasized the statutory requirement for interest payment, regardless of the absence of a show cause notice. The appellant's reliance on a Single Member Bench decision was rejected in favor of the Division Bench's decision. Consequently, the Tribunal upheld the Adjudicating Authority's order, dismissing the appellant's appeal against the interest liability.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the Tribunal's final decision based on relevant legal provisions and precedents.