CESTAT Allows Interest On Custom Duty Refund From Deposit Date To Refund Date

The bench of Anil Choudhary (Judicial Member) has observed that the amount of deposit made during investigation or audit becomes pre-deposit ipso facto upon contest of the dispute or filing of the appeal, and the assessee is entitled to interest as per law from the date of deposit till the date of refund.

The appellant/assessee is an importer. Pursuant to import, there was a dispute with regard to the value of the goods. The appellant deposited the differential amount suggested by the Revenue specifically for the purpose of provisional release. They made a pre-deposit of Rs.13,50,000 on 22.09.2015, pursuant to which the release of goods was allowed. The department issued a show cause notice and adjudicated the dispute, resulting in the passing of the order-in-original, by which the proposed duty was confirmed with a penalty and fine. The appellant/assessee succeeded in appeal before the Tribunal, which allowed the appeal and set aside the demand along with the penalty and fine.

The appellant filed the refund claim on 20.07.2020, claiming for the refund of the amount deposited of Rs. 13,50,000 on 22.09.2015, along with appropriate interest as per rules.

The Adjudicating Authority, Dy. Commissioner, rejected the claim of interest and granted a refund only for the principal amount of Rs.13,50,000, which was granted on 11.03.2021. The appellant preferred appeal before the Commissioner (Appeals), who was pleased to hold that the appellant was entitled to interest under Section 27A of the Customs Act. It was observed that, as per Section 27A, interest is payable from the end of three months from the date of application of refund and allowed interest on refund on the amount of Rs.12,85,013, observing that the appellant was not entitled to interest on the amount adjusted towards fine.

The appellant urged that the issue of interest is no longer res integra and is payable as per Section 129EE of the Customs Act. Upon success in appeal, the amount of pre-deposit is to be refunded with interest from the date of deposit till the date of refund.

The court held that the appellant is entitled to a grant of interest under Section 129EE of the Customs Act for the period from the date of deposit till the date of refund. Accordingly, the appellant was entitled to 12% interest from 23.09.2015 till the date of the grant of refund, i.e., 11.03.2021.

Case Title: M/s BBM Impex Pvt. Limited Versus Principal Commissioner of Customs (Preventive)

Citation: Customs Appeal No. 51662 of 2022-SM

Date: 03.08.2022

Counsel For Appellant: Advocates Aakarsh Srivastava & Ashish Bansal

Counsel For Respondent: Authorised Representative Ishwar Charan

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