Give refund or pay interest promptly – CBEC tells field
Number of exporters and manufacturers are representing to the Board that field formations are not paying interest on delayed payment of refund / rebate. Even the Economic Advisory Council of the PMO has also suggested that in order to counter the impact of recent appreciation in Indian rupee vis a vis US dollar, the department should pay the interest promptly on all delayed payments of tax refunds for exporters so that their liquidity is not negatively impacted.
Board reiterates the provisions of Section 11BB of the Central Excise Act, 1944 are attracted automatically for any refund sanctioned beyond the period of three months. The jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest . All necessary steps should be taken to ensure that refund claims are processed in time to avoid any interest liability. However, in unavoidable circumstances, if processing of refund is delayed, the legal provision for the payment of interest should be scrupulously followed. The Chief Commissioners and the Commissioners of Central Excise should monitor the pendency of rebate claims in their jurisdiction and ensure that refunds and rebates are sanctioned within the stipulated time limit. While reviewing the MTR , the reasons for all refunds / rebate claims pending for more than 3 months must be ascertained by the Chief Commissioners and Commissioners. Considering that a large number of complaints are received on this issue, the senior officers in the Department must ensure for payment of interest in all cases of delayed payment of refund or rebate claims.
Interest will be paid only if the Department stops harassing the Departmental officers for delayed refunds. Let us see how it works. No Assistant Commissioner would like to give refund. This is the axiom. Fortunately if the refund is more than Rs. 5 lakhs, he will push it to the Commissioner (Assistant Commissioner (Audit) as per latest instructions 857/15/2007/CX., Dated: November 2, 2007) for pre-audit. No pre-audit likes to give refund. So what do they do? They sleep on it for six months. After that when they can sleep no further, they will send it back to the Assistant Commissioner with a backdate – there is no accountable tapal system in the department. The Assistant Commissioner will try to give the cheque with a backdate if the assessee is pliant. This, in a case where there is absolutely no doubt about the refund. For the slightest and most ridiculous doubt , refund claim is rejected and the assessee has to go up to the Tribunal to get refund and the Department is forced to pay interest from three months after the original claim with the Assistant Commissioner – department ends up paying interest for three years instead of three months – but now everybody is safe as there is a Tribunal order on whom you can throw the blame. These interesting officers are a big liability to the Department – they cause more interest drain than revenue inflow. Revenue comes on its own, in spite of the officer, not because of him, but interest goes only because of the officer.
And every officer knows that these letters are for coverage in media like TIOL or journals and not for actual payment of refund or interest – otherwise why should the Board reiterate its instructions issued in 2002? Has the Board realised that its instructions had been flouted with impunity for the last six years? They will be – for the next sixty years if the Board is happy with reiterating its instructions and not ensuring that they are followed! Why can't they furnish the status of the refund claim on the websites and all senior officers can monitor them?
CBEC F No 268/01/08- CX8 Dated : January 18, 2008