Paresh Daxini Vs Commissioner of Customs-Mumbai Import-I. (CESTAT Mumbai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, delivered a ruling in the case of Paresh Daxini Vs Commissioner of Customs-Mumbai Import-I, addressing the narrow issue of whether a successful appellant is entitled to interest on the pre-deposit amount refunded by the Customs Department.
Factual Background
The appellant, Paresh Daxini, was penalized by the Adjudicating Authority in in connection with an alleged violation involving duty-free imported goods. The appellant filed an appeal with CESTAT and, upon the Tribunal’s direction under Section of the Customs Act, , made a pre-deposit of .
The appellant was partially successful in his appeal, with CESTAT reducing the penalty from to via an order dated . The appellant sought a refund of the balance amount, (after adjusting the reduced penalty), by application on .
Despite the appeal being decided in , the Customs Department only issued the refund on —a delay of over 13 years—and did so without any interest. The Commissioner (Appeals) rejected the appellant’s subsequent claim for interest, which led to the appeal before CESTAT.
Department’s Argument and Judicial Precedent
The Department’s authorized representative argued that interest was not payable because the pre-deposit was made against a penalty amount. They relied on an order of the CESTAT Ahmedabad Bench from , which, in turn, cited the Supreme Court judgment in Commissioner of Customs (Port) Kolkata V/s. Coronation Spinning India (). This precedent, according to the Department, supported the view that interest on amounts deposited against a penalty was not payable.
