The Chennai Bench of Customs,Excise and Service Tax Appellate Tribunal (CESTAT) denied Vedanta’s claim for interest on a customs refund of ₹7.12 crore, holding that the refund had been sanctioned within the statutory timeframe.

Vedanta Limited,appellant-assessee, had filed 67 refund claims between August and November 2013, seeking Rs. 7.61 crore as excess duty paid after finalization of provisional assessments. The adjudicating authority issued individual orders confirming the refund amount and eligibility.

On 16.09.2013, the department asked the appellant to submit original importer copies of Ex-bond Bills of Entry and a Chartered Accountant’s certificate on unjust enrichment. After completing the process, the authority sanctioned Rs. 7.12 crore on 30.09.2014 but did not grant interest on the refund.

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The assessee challenged the denial of interest before the Commissioner (Appeals), who rejected the appeal. Hence, the present appeal.

The two member bench comprising P.Dinesha (Judicial Member) and Ajit Kumar (Technical Member) heard both parties and carefully examined the appeal memorandum, written submissions, and the compilation of case laws and statutory provisions. It noted that the case involved refund of excess duty paid after finalization of provisional assessments, but without any interest.

The assessee challenged the denial of interest under Section 18 of the Customs Act, 1962, while the department argued that the refund was sanctioned within the prescribed time under Section 27, and hence, no interest was payable.

The appellate tribunal observed that the refund claims related to provisionally assessed Bills of Entry filed between May 2007 and May 2013. After final assessments, the assessee filed 67 refund claims between August and November 2013.

The department issued a deficiency memo on 16.09.2013, followed by a show cause notice dated 27.12.2013, pointing out issues such as non-submission of original Bills of Entry, duty-paid challans, and inadequacies in the Chartered Accountant's certificate.

The assessee responded on 24.07.2014 and was granted a personal hearing on 30.09.2014, after which the adjudicating authority accepted the explanation and sanctioned the refund. However, the issue remained whether interest was payable on the delayed refund.

The tribunal relied on the Karnataka High Court’s decision in Commissioner of Customs, Mangaluru vs. JSW Steel Ltd. [2022 (379) ELT 451 (Kar.)], which was later upheld by the Supreme Court. The High Court had held that interest was not payable if the refund was granted within three months from the date of submission of all requisite documents, even if the original claim was filed earlier.

Applying the same principle, the CESTAT found that the assessee’s delay in furnishing complete documents had caused the initial deficiency. Since the refund was sanctioned within three months from the date of final reply, no interest was payable.

Given the binding nature of the High Court judgment upheld by the Supreme Court, the tribunal held that the case law cited by the assessee had no bearing. It rejected the appeal and upheld the impugned order.

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