- 1 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 15714 OF 2025 (T-RES) BETWEEN: LARSEN AND TOUBRO LTD, A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1913, STRATEGIC ELECTRONIC CENTRE, "KOMARLA SOLITAIRE", 145/2, OLD MADRAS ROAD, BENGALURU 560093. REPRESENTED THROUGH ITS AUTHROISED SIGNATORY MS. PADMAVATHI N, MANAGER FINANCE. …PETITIONER (BY SRI.PRAKASH CHANDRA SHAH, SENIOR COUNSEL ALONG WITH SRI.MIHIR MEHTA, ADVOCATE) AND: 1. UNION OF INDIA, THROUGH ITS SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI 110001. 2. THE PRINCIPAL COMMISSIONER Digitally signed by NAGAVENI Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 OF CENTRAL TAX, GST COMMISSIONERATE, BENGALURU EAST, HAVING HIS OFFICE AT 2ND FLOOR, TRAFFIC AND TRANSIT MANAGEMENT CENTRE, BMTC BUS STAND, OLD AIRPORT ROAD, DOMMALURU, BENGALURU-560071. 3. THE ASSISTANT COMMISSIONER OF CENTRAL TAX, GST COMMISSIONERATE, BENGALURU EAST, HAVING HIS OFFICE AT 2ND FLOOR, TRAFFIC AND TRANSIT MANAGEMENT CENTRE, BMTC BUS STAND, OLD AIRPORT ROAD, DOMMALURU, BENGALURU-560071. …RESPONDENTS (BY SRI. KUSHALAPPA B M., ADVOCATE FOR R1; SRI.ARAVIND V CHAVAN, ADVOCATE FOR R2 & R3)] THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING THIS HON BLE COURT BE PLEASED TO ISSUE A WRIT OF MANDAMUS OR A WRIT IN THE NATURE OF MANDAMUS OR ANY OTHER WRIT OR ORDER OR DIRECTION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA ORDERING AND DIRECTING THE RESPONDENTS BY THEMSELVES AND/OR THEIR OFFICERS AND/OR - 3 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 SUBORDINATES TO FORTHWITH SANCTION AND GRANT INTEREST OF RS.6,56,40,817 IN RESPECT OF REFUND SANCTIONED AND GRANTED AFTER THE EXPIRY OF THREE MONTHS FROM THE DATE OF APPLICATION Ref no:AAACL0140 PEMO89_2014-002_RF_RR (VIDE ANNEXURE-B) dated 15/09/2014 I.E. FROM 15.12.2014 TILL THE DATE OF ACTUAL RECEIPT THE REFUND I.E. 09.04.2025 UNDER SECTION 11BB OF THE CENTRAL EXCISE ACT, 1944 AND ETC. THIS PETITION, COMING ON FOR ORDERS HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner is before this Court seeking the following prayers: "(i) this Hon'ble Court be pleased to issue a Writ of Mandamus or a writ in the nature of Mandamus or any other writ or order or direction under Article 226 of the Constitution of India ordering and directing the Respondents by themselves and/or their officers and/or subordinates to forthwith sanction and grant interest of Rs. 6,56,40,817 in respect of refund sanctioned and granted after the expiry of three months from the date of application Ref no:AAACL0140PEMO89_2014- 002_RF_RR (vide Annexure-B) dated 15/09/2014. i.e. from 15.12.2014 till the date of actual receipt the refund i.e. 09.04.2025 under Section 11BB of the Central Excise Act, 1944. - 4 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 (ii) this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner's case and after going into the validity and legality thereof be pleased to quash and set aside the impugned Order-in-Original No. 26/2024-25/ED-5 dated 11.03.2025 (Annexure-A) passed by the Respondent No. 3 to the extent adverse to the Petitioner as it fails to grant the statutory interest under Section 11BB of the Central Excise Act, 1944 on the delayed sanction of refund under Section 11B of the Central Excise Act, 1944. (iii) for cost of this writ petition may kindly be awarded in favor of the Petitioner; (iv) such other and further order or orders as may be deemed just and proper in the facts and circumstance of the present case." 2. Heard Sri.Prakash Chandra Shah, learned Senior Counsel appearing for the petitioner, Sri.Kushalappa B.M., learned counsel appearing for respondent No.1, Sri.Aravind V Chavan, learned counsel appearing for respondent Nos.2 and 3 and have perused the material on record. 3. The issue in the lis revolves around a narrow compass, as projected before this Court. The petitioner is claiming interest on the refund that is ordered by respondent No.3. On 01.12.2024, a show cause notice is issued by the Assistant Commissioner of Central Excise proposing to reject - 5 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 the refund application of the petitioner, on the ground that AAFLs manufactured and cleared by them during the period December, 2013 to August, 2014 were correctly classified under CH 93059000 and the duty paid UNDER PROTEST is liable to be vacated. The petitioner was then issued a show cause notice demanding a huge sums and an order in Order in Original, comes to passed by the Commissioner of Central Excise, dated 31.03.2015. Being aggrieved by the order in original, the petitioner files an appeal under the Central Excise Act, 1944 (for short ‘the Act’). The Commissioner of Appeal dismisses the appeal. Aggrieved by the order-in-appeal, the petitioner files an appeal before the appellate Tribunal in Central Excise Appeal No.20695/2022. On 24.10.2024, the Tribunal allows the appeal by remitting the matter back to the adjudicating Authority for de novo adjudication. The third respondent sanctions refund to the petitioner but fails to grant statutory interest on delayed sanction of refund, which order of sanctioning refund as claimed was granted after three months of the application. It therefore, becomes appropriate to notice the order of the Tribunal. It reads as follows: - 6 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 "This is an appeal filed against Order-in-Appeal No.266/2022 dated 28.07.2022 passed by the Commissioner of Central Tax (Appeals), Bangalore. 2. Briefly stated the facts of the case are that the appellant had filed refund claim of Rs.10,60,03,044/- being the differential duty paid by them under protest during the period December 2013 to 31.08.2014 on the ground instead of discharging duty @ 6% under Classification No.9301 2000, they have paid duty @ 12% on "Akash Air Force Launchers" considering its classification as CSH 9305 9100 as directed by the Department. The refund claim was rejected by the adjudicating authority confirming its classification under the said Chapter sub-heading 9305 9100. Aggrieved by the same, they filed appeal before the learned Commissioner (Appeals) who also rejected their appeal. Hence, the present appeal. 3. At the outset, the learned advocate for the appellant has submitted that the learned Commissioner (Appeals) in the impugned order has rejected their appeal solely on the ground that the classification dispute has been pending before the Tribunal; hence eligibility of refund could be decided only after the determination of the said issue by the Tribunal. He has submitted that the Tribunal recently decided the classification of the "Akash Air Force Launchers" in favour of the appellant vide Final Order No.20598-20607/2024 dated 22.07.2024; therefore the refund is admissible to them. 4. Learned AR for the Revenue has submitted that the learned Commissioner(Appeals) has not decided the admissibility of refund claim on merit and submitted that the matter may be remanded to the adjudicating authority for determination of the same. 5. Heard both sides and perused the records. - 7 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 6. The only ground on which the refund claim was not considered by the learned Commissioner (Appeals) in the impugned order is due to the pendency of the classification dispute before this Tribunal. Since the classification has now been decided by the Tribunal in favour of the Appellant, the issue of refund arising out of the said classification of "Akash Air Force Launchers" could now be determined. As both sides consented to remand the matter to the adjudicating authority for scrutiny of the said refund claim, the matter is remanded to the adjudicating authority for considering the refund claim afresh. Needless to mention, a reasonable opportunity of hearing be allowed to the appellant. It is expected that as far as practicable, the refund claim be adjudicated within a period of three months from the date of communication of this order. Appeal is allowed by way of remand to the adjudicating authority." The Tribunal accepts the claim of the petitioner-assessee and determines that the petitioner is entitled to refund and directs the adjudicating officer to calculate the refund and pass necessary orders. The adjudicating officer passes necessary orders in terms of the order of the Tribunal but fails to grant interest. 4. Respondent No.3 in terms of the order dated 11.03.2025, allows the claim of the assessee and directs refund by the following order: - 8 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 "We also declare and affirm that for the subject supplies of Larsen & To us, we are not entitled to avail CENVAT credit of the C. Excise Duty ar them whether paid without Protest or under Protest". 19. From the sales invoices issued for the period from December 2013 to August 2014 it is seen that the assesssee has issued 19 sales invoices during the period. It is further seen that they have paid Central Excise Duty and Cesses of Rs. 21,20,06,888/ out of which Rs. 10,60,03,444/- has been paid @ 6.18 paid under Protest. The claimant except for the month of December, 2013, has declared the payment under Protest in their ER-1 returns filed for the months of Jan'14 to Aug'14. Since, the claimant has made the mention of payment of tax under protest on all the invoices, I hold that non- declaration in ER-1 is only a procedural lapse and consider the refund claim. 20. The refund claim in question has been cleared in pre-audit vide letter 10/03/2025 with an observation that "to be eligible for refund, the noticee should not recover the said amount in future and should not treat said amount as outstanding in the books of accounts. Please ensure compliance in this regard as per the provisions of section 11B of the CEA,1994 read with Hon'ble supreme court judgement in M/s Mafatlal case". In view of this an undertaking has been obtained from the claimant vide letter dated 11/03/2025 as under: "We hereby undertake that upon receipt of the refund from your esteemed office, the amounts realised will be duly adjusted against the claims receivable in our books of accounts. We further undertake that no such amount shall be recovered from M/s.Bharat Electronics Limited at any point of time." From the above, it is clear that the claimant shall not collect the amount from M/s Bharath Electornics in respect of which refund is claimed in the subject claim and the same satisfies the requirement of pre-audit observation. - 9 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 21. In view of the foregoing discussions, I pass the following order: ORDER 22. I hereby sanction refund of Rs.10,60,03,444/- (Rupees Ten Crore Sixty Lakhs Three Thousand Four Hundred and Forty Four Only) to M/s Larsen & Tubro Limited(L&T), Heavy Engineering, Strategic Electronics Center, "Komarla Solitaire", No,145/2, Old Madras Road, Bangalore 560093, C. EX Registration No. AAALL0140PEM089 in compliance of Hon'ble CESTAT's Final Order No 20695/2022 dated 24.10.2024. The refund is `10,60,03,444/-. In the order, there is no interest granted for refund. It is an admitted fact that the order of refund is not challenged by the respondents but the only issue that is got as observed herein above is with regard to grant of interest on the said refund. Prayer of the petitioner merits acceptance with the direction to the respondents to pay interest on the amount refunded, in accordance with law as is applicable in law in cases of the kind of refund within 12 weeks. The interest be calculated and paid to the petitioner within 12 weeks from the date of receipt of the copy of the order. 5. In the light of the refund being granted in terms of the order of the Tribunal by the adjudicating officer, the petitioner would definitely become entitled to interest on such - 10 - HC-KAR NC: 2025:KHC:34808 WP No. 15714 of 2025 refund as is available in law from the date, he registered his claim for refund. Ordered accordingly and Writ Petition is disposed. Sd/- (M.NAGAPRASANNA) JUDGE CBC List No.: 1 Sl No.: 10