Statutory interest under Section 11BB accrues three months after the original refund application, regardless of appellate adjudication.

The petitioner challenged the order-in-original dated 24 March 2026 passed by Respondent No. 3, insofar as it denied statutory interest on a refund of Rs. 53,05,173/- under Section 11BB of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994.

The petitioner contended that its original refund application under Section 11B of the Central Excise Act had been filed on 20 May 2015, and that the claim was ultimately allowed by the CESTAT on 8 December 2025.

The refund amount was paid to the petitioner on 23 June 2026.

The Revenue treated the petitioner’s communication dated 5 January 2026, submitted after the CESTAT order, as the relevant refund claim and contended that interest could arise only after three months from that communication or from the order sanctioning the refund.

The petitioner argued that the communication dated 5 January 2026 was merely a continuation or reminder of the original refund application and that interest was payable from the expiry of three months from the original application date, i.e., from 20 August 2015, until the date of actual refund.

Whether statutory interest under Section 11BB of the Central Excise Act, 1944, is payable from the expiry of three months from the date of receipt of the original refund application under Section 11B, or only from the date of the favourable appellate order or subsequent refund communication?

Whether the petitioner’s communication dated 5 January 2026 constituted a fresh refund claim, or merely continued and reiterated the original refund application filed on 20 May 2015?

The Court applied Sections 11B and 11BB of the Central Excise Act, 1944, as made applicable to service tax matters through Section 83 of the Finance Act, 1994.

Section 11BB requires payment of interest where a refundable amount is not refunded within three months from receipt of the refund application under Section 11B(1).

Relying on the Supreme Court’s decision in Ranbaxy Laboratories Ltd. v. Union of India, 2011 (273) E.L.T. 3 (S.C.), the Court held that interest becomes payable upon expiry of three months from receipt of the refund application, and not from the date of an appellate or court order granting the refund.

The deeming provision in the Explanation to Section 11BB treats an appellate or court order as an order under Section 11B(2), but does not postpone the commencement of interest under Section 11BB.

The Court found that the petitioner’s original refund application was filed on 20 May 2015 and that the refund claim was ultimately allowed by the CESTAT on 8 December 2025.

Applying the binding rule in Ranbaxy Laboratories, the Court held that the subsequent appellate order did not reset or postpone the statutory commencement of interest.

Since the refund was not paid within three months of the original application, interest became payable from 20 August 2015 until the date of actual refund.

The Court further held that the communication dated 5 January 2026 was only a continuation or reminder of the pending original claim and could not be treated as a fresh refund application for the purpose of denying interest.

Accordingly, the Revenue’s interpretation of the communication and its denial of statutory interest were erroneous.

The order dated 24 March 2026 was quashed and set aside to the extent that it denied statutory interest on the refund of Rs. 53,05,173/-.

Respondent No. 3 was directed to pay/refund the amount of Rs. 53,05,173/- together with statutory interest from 20 August 2015 until the date of actual refund, within eight weeks from the date of the judgment.

The petition was accordingly disposed of.