As a relief to Reliance Industries, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that interest on reversed Cenvat Credit is allowable as the refund not sanctioned within the stipulated time period of 3 Months from date of refund application.
Under Rule 6(3A) of Cenvat Credit Rules, 2004 appellant reversed the cenvat credit from time to time. On finalization of their reversal for a particular period it was found that the appellant had reversed the excess amount as compared to the actual cenvat credit required to be reversed. The appellant applied for the refund claim vide their letter dated 24.05.2016 for an amount of Rs 2,70,69,161/- and letter dated 22.07.2016 for an amount of Rs. 22,50,839 and was sanctioned by the Adjudicating Authority vide Order-In-Original dated 05.11.2018.
The sanctioning authority has not granted the interest on such sanctioned refund claim. On appeals, the Commissioner (Appeals) rejected the appeals on the ground that the appellant in terms of Rule 6(3A)(f) would have adjusted the excess amount on their own by taking credit suo moto, in failure to do so the appellant is not entitled for interest.
Ms. Dimple Gohil, Counsel appeared on behalf of the appellant submits that the refund claim is governed by Section 11B therefore consequential interest under section 11 BB is available to the appellant. Shri Prakash Kumar Singh, Superintendent (AR) appeared on behalf of the Revenue supported the finding of the impugned order.
It was viewed that the Commissioner has denied the claim of interest on the ground that since the appellant were entitled to take the suo moto credit the refund is not governed by section 11 B.
A Coram of Single-member Mr Ramesh Nair (Judicial) observed that there is a delay in sanctioning the refund against the application of refund filed by the appellant on 24.05.2016 and 21.07.2016 whereas the refund was granted on 05.11.2018.
It is settled law that in case of delay in sanctioning refund after 3 months of filing of application the assessee is entitled for the interest after 3 months from the date of application till the sanction of refund.
The Tribunal held that the appellants are entitled for the interest in the refund claim sanctioned from the date after 3 months of filing the application for refund claim till the date of sanction and the impugned orders was set aside.
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