The Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) Chandigarh bench held that interest not allowable when customs refund was granted within 3 months from date of final assessment under Customs Act, 1962.
M/s H L G Trading, the appellant imported 100% nylon yarn raw white in yanks stock lot under 23 bills of entry between August 2013 to September 2014. The goods imported were provisionally assessed on account of verification undertaken by the department qua the description, value and availability of Notification No. 30/2004-CE dated 09.07.2004 with respect to the said goods from levy and collection of countervailing duty.
The bills of entry were finally assessed, accepting the declared value of description of goods under final assessment orders dated 28.02.2017. The appellant therefore filed a claim for refund of an amount of Rs.46,50,912/- paid as 20% deposits under the PDA Regulation, 2011. The appellant also made a claim for interest on the said sums. Vide order dated 19.06.2017, the original authority admitted the claim and sanctioned the said sums of Rs.46,51,012/-.
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The claim for interest was rejected on the ground that 20% deposit do not partake the nature of duty under the Customs Act, 1962 and are security deposits refund of which do not attract interest liability on the department relying upon the orders of the Tribunal in Rajendra Mechanical Industries Vs. CC and that of the three Members Bench in Advance Mechanical Works Vs. CCE [2005 . Challenging the rejection of the claim for interest, the appellant filed appeal before the Commissioner (Appeals) who vide the impugned order has rejected the appeal by relying on the very same judgments of this Tribunal and holding that 20% deposits in terms of PDA Regulation 2011 is not duty and do not fall within the ambit of section 27 of the Customs Act, 1962 which deals with refund of duty.
Shri Naveen Bindal, appeared on behalf of the appellant submitted that the appellant is entitled
to interest on the refund amount which was paid during investigation or during adjudication proceedings. The payment of interest on refund is a corollary and consequence of the said refund claim being found admissible and disbursed to the assessee in full and the same cannot be wished away by the Revenue.
On the other hand, the AR for the Revenue reiterated the findings of 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. Section 18 prescribes all the provisions with regard to provisional assessment and final assessment and grant of refund and interest thereon as the case may be.
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It was argued that sub-section 4 of Section 18 clearly specifies that interest is payable only if refund is not granted within 3 months from the final assessment. Further submitted that once the refund has been granted as per Section 18 and 27A of the Customs Act within three months from the date of final assessment, in that case, the appellant cannot claim any interest.
A single bench of Mr. S. S. Garg, Member (Judicial) found that the appellant is entitled to interest if the refund is payable after the expiry of 3 months from the date of final assessment as per Section 18 (4) of the Customs Act whereas in the present case the refund was granted within 3 months as prescribed under Section 18 (4) of the Act.
Therefore, the bench held that the appellant is not entitled to any interest in view of the statutory provisions. It was viewed that there is no infirmity in the impugned order and uphold the same by dismissing the appeal of the appellant-assessee.
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