Full Judgment
2. Shri Bipin Verma, learned D.R., submitted that the Respondents had exported the goods under claim for rebate of duty and preferred rebate claim which was initially rejected by the Asst. Commissioner under Order dated 29-8-1996 which was also upheld by the Commissioner (Appeals) under Order-in-Appeal dated 20-4-2001; that however, the Government of India in revision allowed the revision application vide Order No. 109/2001 dated 21-11-2001; that subsequently the Dy.
Commissioner had sanctioned the refund under Order dated 12-7-2002 but has disallowed the interest on the ground that as per Explanation appended to Section 11BB of the Central Excise Act the Order passed by the Revisionary Authority cannot be treated as Order passed under sub-section (2) of Section 11B for the purpose of Section 11BB; that the Commissioner (Appeals), however, under the impugned Order has allowed the appeal filed by the Respondents on the ground that the revisionary authority would fall within the category of Appellate Court and its Order would be deemed to be an Order under sub-section (2) of Section 11B of the Act. The learned D.R. submitted that Section 11BB of the Act provides for payment of interest, if duty is not refunded within 3 months from the date of receipt of application; that Explanation in Rule 11BB provides that "where any Order of refund is made by the Commissioner (Appeals), the Appellate Tribunal or any Court against an Order of the Asst. Commissioner of Central Excise or Dy.
Commissioner, Central Excise under subsection (2) of Section 11B the Order passed by the Commissioner (Appeals), the Appellate Tribunal or as the case may be, by the Court shall be deemed to be an Order passed under the said sub-section for the purpose of this Section." The learned D.R. contended that the Central Government as revisionary authority is ' not specified in the said Explanation, and therefore, the Order passed by the re-visionary authority granting the rebate of duty cannot be treated as an Order of refund passed under sub-section (2) of Section 11B of the Act, and therefore, the provision of interest as contained in Section 11BB will not be applicable.
3. The Respondents have filed Cross Objection as well as they were represented by Shri K.K. Anand, learned Advocate. It has been contended by the learned Advocate that the Revenue has restricted the substantive provision of Section 11BB of the Act by mis-interpreting the Explanation appended thereto; that the Explanation cannot widen or restrict the scope of substantive provisions; that it can only explain or clarify. He has relied upon the decision in the case of H & R.Johnson (India) Ltd. v. C.B.E. & C. - 2002 (144) E.L.T. 506 (Karnataka) wherein it has been held that the purpose of Explanation is to explain the meaning of word contained in Section and hence, it should be given a construction which is consistent with the purpose of Section.
4. We have considered the submissions of both the sides. As per Explanation (A) to Section 11B of the Central Excise Act refund includes rebate of duty of excise on excisable goods exported out of India or excisable material used in the manufacture of goods which are exported out of India. The Respondents had filed rebate claim on 31-5-96 with the department which had been finally sanctioned on 12-7-2002 only. Section 11BB of the Central Excise Act provides that if any duty ordered to be refunded under sub-section (2) of Section 11B to any applicant is not refunded within 3 months from the date of receipt of application under sub-section (1) of that Section, an interest at the rate fixed by the Board has to be paid to the Applicants from the date immediately after expiry of 3 months from the date of receipt of application till the date of refund of such duty. It is not in dispute that the rebate claim was filed by the Respondents in May, 1996 and the rebate has been sanctioned only in July, 2002. Thus the duty has not been refunded of which rebate claim was claimed by the Respondents within 3 months from the date of receipt of application. Thus in terms of provisions of Section 11BB of the Act the Department is liable to pay interest. The Explanation appended to Section 11BB of the Act only deals with the situation where an order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court, that order shall be deemed to be an Order of refund under sub-section (2) of Section 11B of the Act. In the present matter the Order of refund has been made by Dy. Commissioner only vide Order dated 12-7-2002 which is apparent from the Order which reads as "I sanction rebate of Rs. 53,351/- (Rupees fifty three thousand three hundred & fifty one only) to M/s. Prem Textile Ltd., 85, M.T. Cloth Market, Indore in terms of Section 11B of the Central Excise Act, 1944." Thus the reliance of the Department on Explanation to deny the interest is not correct. Further, in any case Explanation cannot restrict the scope of the substantive provision as the purpose of an Explanation is to explain the meaning of words contained in the Section. I do not find any merit in the appeal filed by the Revenue which is rejected.