Interest on Refund is allowable for amount deposited during Investigation: CESTAT [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) of New Delhi has held that the interest on refund is allowable for amount deposited during investigation.

Sh. Aakarsh Srivastava & Sh. Ashish Bansal appeared for the appellant and Sh. Ishwar Charan appeared for the respondent.

The appellant, M/s BBM Impex Pvt. Limited was 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. Thereafter adjudicated the dispute resulted in the passing of the order-in-original, whereby the proposed duty was confirmed with 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 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 Commissioner (Appeals), was further observed that as per Section 27A, interest was payable from the end of three months, from the date of application of refund and accordingly, allowed interest on refund for the period 12.01.2021 to 04.03.2021 only, on the amount of Rs.12,85,013/-, and held that the appellant was not entitled to interest on the amount adjusted towards fine.

The appellant urged that the interest be payable as per Section 129EE of the Customs Act. It was observed that in the case of Reeba Textiles Ltd the Tribunal had allowed interest on delayed refund from the date of deposit till the date of refund, which amount becomes refundable due to the success of the appellant in appeal.

Mr Anil Choudhary, member (judicial) held that the appellant was entitled to grant of interest under Section 129EE of the Customs Act, for the period from the date of deposit till the date of refund and interest @12% P. A is payable. The appeal was allowed.

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