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13. What is the appropriate rate of interest for a delayed refund, of an advance payment made towards an audit objection?

13.1 The appellant has prayed to disregard the interest rate as prescribed by a notification under section 11BB and grant a higher interest @ 12% on the 'delayed payment of refund', based on the judgment of the Apex court in Sandvik Asia Limited (supra) and applied to indirect tax regime by the Tribunal relying on the said judgment in Parle Agro Pvt. Ltd, (supra) and other judgments. In response Revenue has strongly challenged the relevance of the judgment in Sandvik Asia Limited being one on the payment of compensation, and in the light of the subsequent judgment of the Hon'ble Supreme Court clarifying the position in Gujarat Fluro Chemicals (supra). They have also questioned the authority of this Tribunal, a creature of the statute, to determine the rate independent of the rate prescribed under the Act. The arguments have been set out at para 7.2 above and are not repeated.

This proposition has been later on reiterated in Chandra Kishore Jha Vs. Mahavir Prasad reported in 1999 (8) SCC 266, Dhananjaya Reddy Vs. State of Karnataka reported in 2001 (4) SCC 9 and Gujarat Urja Vikas Nigam Limited vs. Essar Power Limited reported in 2008 (4) SCC 755." (emphasis added) In the circumstances, the appellant would only be eligible for interest at the effective rate as per the notification issued under section 11BB of Central Excise Act, 1944 and not at any higher rate. The judgments cited by the appellant in the case of Sandvik Asia Limited (supra) which deals with the payment of compensation in an Income Tax case and Parle Agro Pvt. Ltd, (supra) and other judgments cited, which relates to refund of advance payment made during an investigation, are not germane to the facts of this case.