Interest on delayed refund :

The Central Excise Act also provides for payment of interest on delayed payment of refund. As per section 11BB, if any duty ordered to be refunded under section 11B(2) has not been refunded within three months from the date of receipt of the refund application in the prescribed manner and form along with the supporting documentary evidence as laid down in the relevant rules, interest at the rate notified by the Government which should not be below 5% and should not exceed 30% per annum (currently notified as 6% p.a. as per Notification no. 67/2003 dated 12.9.2003) shall have to be paid on such duty.

The interest will be paid from the date immediately after the expiry of three months from the date of receipt of application till the date of refund of such duty. As per Explanation to Section 11BB where any order of refund is made by Commissioner (Appeals) or Tribunal or Court the said order shall be deemed to be a refund order for the purpose of section 11B (2).

From the above provisions it is evident that in case any order for refund is passed by the Commissioner (Appeals) or Tribunal or Court, interest will have to be paid from the expiry of the three months from the date of filing of refund application. Interest is always with reference to date of application and not with reference to the date of passing of order.

However, interest cannot be claimed in case the application is not filed as per the provisions of the statute.