The Andhra Pradesh High Court held that the refund of interest on pre-deposit to be determined from the expiry of 3 months from the date of communication of the order.
The appellant, M/s.Maithan Ceramics Limited had appealed before the Office of the Commissioner of Customs, Visakhapatnam challenging an Order-In- Original imposing duty and penalty upon him with regard to incorrect availing of DEPB scrips. During the pendency of the Appeal, the appellant had deposited the duty and penalty as per the Order In Original.
Upon the Appeal being allowed the appellant sought a refund of the duty and penalty along with interest before the Commissioner. The Commissioner allowed a refund of the deposit along with interest at the prescribed rate from the date of making the deposit to the date of refund. This order was appealed before the Commissioner of Appeals, who set aside the interest component ordered in favor of the appellant on the ground that the deposit of duty and penalty made by the appellant is not a pre-deposit in terms of Section 129E of the Customs Act. Appellant filed an appeal before the Tribunal, which reversed the order of the first appellate authority and held that the deposit made by the appellant was pre-deposit under Section 29E of the Customs Act, 1962, and interest as applicable on pre-deposit needs to be paid to the appellant.
However, the Tribunal modified the order on an application of the Department to the extent that the interest, as applicable during the period, on pre-deposit under section 129EE, needs to be paid to the appellant.
Mr. P.N.Sunil Kumar Reddy, counsel appearing for the appellant submits that the rectification order incorrectly applied Section 129EE of the Customs Act and denied the appellant interest from the date of deposit till the date of payment. It is contended that the deposit was made in 2006 when there was no statutory restriction on the discretion to grant interest from the date of deposit. Hence, the rectification order was incorrect and contrary to the law declared by the Apex Court in Sandvik Asia Limited v. Commissioner of Income Tax-I, Pune, and others.
The division bench of Justice Joymalya Bagchi and Justice K. Suresh Reddy ruled that the interest on the pre-deposit refunded to the appellant is to be determined as pre amended Section 129EE of the Customs Act i.e., for a period commencing after the expiry of three (3) months from the date of communication of the order of the appellate authority till the refund of such amount and not from the date of deposit of the said amount till the date of refund.
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