The Chandigarh bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that Saraswati Knitwear Pvt Ltd (the Appellant) is not entitled to receive interest on excess duty paid to the Commissioner of Customs, Ludhiana (the Respondent) for clearing PCT Polyester yarn.
The value declared by the company for clearing their PCT Polyester yarn (1.25 USD/Kg) appeared on the lower side and thus was provisionally assessed at 2.60 USD/Kg. Aggrieved by the provisional assessment, the company filed an appeal to the commissioner (Appeals) wherein he ordered the Assessing Officer (AO) to finalize the assessment at the earliest and opined that the question of refund of excess duty paid, if any, would only arise after the adjustment of provisionally assessed duty under of Section 18(2)(a) of Customs Act, 1962.
The AO finalized his assessment at 1.40 USD/Kg, which was accepted by the company. On refund application, the Adjudicating Authority sanctioned the claim of Rs 13,22,041/-.
The counsel who appeared on behalf of the company submitted that the impugned order was not sustainable in law as it was passed without properly appreciating the facts and the law and that they were entitled to the interest for the time of investigation and adjudication procedure.
He further submitted that the department took more than 8 years to finalize the assessment which has caused a delay in granting of refund and cited decisions holding that the amount deposited during the investigation, if ultimately not sustainable, was to be treated as revenue deposit and the same was to be refunded with interest.
The counsel who appeared on behalf of the revenue reiterated the findings in the impugned order and submitted that the provisional assessment and final assessment are common phenomena in Customs and are governed under Section 18 of the Customs Act, 1962 and Section 18(2)(a) specifies that interest is payable only if the refund was not granted within 3 months from the final assessment. Further, the final assessment was accepted by the company and filed refund claims, and the said amount was refunded to them within 3 months.
He further submitted that the decision relied upon by the appellant was not applicable as none of the judgments relied upon by the company were under provisional assessment as provided under Section 18 of the Customs Act, 1962.
The bench consisting of S.S Garg (Judicial Member) after hearing both sides observed that the refund was credited to the company within 3 months from the date of final assessment as required under section 18(2)(a) of the Customs Act 1962, therefore the refund claim by the company was rejected and the appeal was dismissed.
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