BBM Impex Pvt. Limited Vs Principal Commissioner of Customs (Preventive) (CESTAT Delhi)
Appellant is entitled to interest from the date of deposit to the date of refund
The CESTAT, New Delhi in the matter of M/s BBM Impex Pvt. Limited v. Principal Commissioner of Customs (Preventive) [Customs Early Hearing Application No.50414 of 2022 with Customs Appeal No. 51662 of 2022-SM] has held that, the appellant is entitled to interest at specified rate from date of deposit to date of refund.
M/s BBM Impex Pvt. Limited (“the Appellant”) is an importer and had disagreement on the value of the products with Revenue.
To ensure a provisional release, the Appellant deducted the disparity amount advised by the Revenue. On September 22, 2015, they submitted a pre-deposit of Rs. 13,50,000, which allowed for the release of the products. After giving a show-cause notice on February 04, 2016, Revenue decided the disagreement and passed an original decision in which the proposed duty was confirmed along with a penalty and fine. Finally, the Appellant/assessee was successful in his appeal before the CESTAT which, approved the appeal and set aside the demand together with the penalty and fine.
The Appellant filed claim for refund of the deposited amount as per the rules, along with interest, however, Dy. Commissioner rejected the claim of interest and granted refund only for the principal amount of Rs.13,50,000/-, which was granted on March 11, 2021.
Affirming that they are entitled to interest under Section 27A of the Customs Act, 1962 (“the Customs Act”), the Appellant filed an appeal with the Commissioner (Appeals). It was noted that Section 27A stipulates that interest is due three months after the application date for a refund. As a result, interest in the refund of Rs. 12,85,013 was only permitted from January 12, 2021 to March 04, 2021.
The CESTAT placed its reliance on Sandvik Asia Ltd. Vs Commissioner of Income Tax-I (Supreme Court of India) [Civil Appeal No. 1337-1340 Of 2005], wherein refund under the Income Tax Provisions was allowed @12% P.A, and held that according to Section 129EE of the Customs Act, the Appellant is entitled to interest payments from the date of deposit until the date of refund.
FULL TEXT OF THE CESTAT DELHI ORDER
As the appeal itself is taken up for hearing, the early hearing application stands disposed of.
2. The only issue involved in this appeal is as to under which Section, the appellant is entitled to interest, rate of interest and the period of interest.
3. The brief facts are that the appellant is an importer. Pursuant to import, there was dispute with regard to value of the goods. The appellant deposited the differential amount suggested by the Revenue specifically for the purpose of provisional release. They made pre-deposit of Rs.13,50,000/- on 22.09.2015, pursuant to which, release of goods was allowed. Thereafter, Revenue issued show cause notice on 4.2.2016 and thereafter adjudicated the dispute resulting into passing of the order-in-original, whereby the proposed duty was confirmed with penalty and fine. Finally, the appellant/assessee succeeded in appeal before this Tribunal, which allowed the appeal and set aside the demand along with penalty and fine, vide Final Order No. C/A-50695/2020 dated 12.06.2020.
4. Thereafter, 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.
5. The Adjudicating Authority – Dy. Commissioner rejected the claim of interest and granted refund only for the principal amount of Rs.13,50,000/-, which was granted on 11.03.2021. Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals), who was pleased to hold that the appellant is entitled to interest under Section 27A of the Customs Act. It was further observed that as per Section 27A, interest is 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/-, observing that in view of the appropriation in the order-in-original, the appellant is not entitled to interest on the amount adjusted towards fine. Being aggrieved, the appellant is before this Tribunal.
6. Heard the parties.
7. Counsel for the appellant urged that the issue of interest is no longer res integra, and is payable as per Section 129EE of the Customs Act. Upon success in appeal, the amount of pre-deposit is to be refunded with interest from the date of deposit till the date of refund.
7.1 He also relies on the ruling of this Tribunal in the case of Indo Rubber and Plastic Works – wherein this Tribunal held that the amount of deposit made during investigation /audit becomes pre-deposit ifso facto upon contest of the dispute/filing of the appeal, and accordingly, entitled to interest as per law from the date of deposit till the date of refund. This order of the Tribunal was confirmed by the Hon’ble Supreme Court, whereby the appeal of the Revenue was dismissed reported at 2021 (378) ELT A-141. He also relies on the ruling of the Chandigarh Bench of this Tribunal in the case of Reeba Textiles Ltd. – 2022 (Vol.3) TMI 693, wherein the Tribunal had allowed interest on delayed refund from the date of deposit till the date of refund, which amount becomes refundable due to success of the appellant in appeal. The Hon’ble Punjab & Haryana High Court in its judgement confirmed the ruling of the Tribunal taking notice of the ruling of the Hon’ble Supreme Court in Sandvik Asia Ltd., – 2007 (8) STR 193 (SC), wherein refund under the Income Tax Provisions was allowed @12% p.a. The Hon’ble High Court took observed that the provision of interest is pari materia under the Income Tax Act and the Central Excise Act, 1944 and accordingly appeal of the Revenue was dismissed upholding the order of this Tribunal.
8. Accordingly, ld. Counsel prays for grant of interest at the appropriate rate following the precedent ruling of this Tribunal affirmed by the Hon’ble High Court and the Hon’ble Supreme Court.
9. Opposing the appeal, learned Authorised Representative for Revenue urges that under the similar circumstances, wherein interest on pre-deposit was granted by this Tribunal under Section 35FF in the matter of Jovex International for the period, from the date of deposit till the date of refund @ 12% p.a., Revenue has preferred appeal before the Hon’ble Delhi High Court, being Appeal No. C.E.A. No.3/2022, wherein the Hon’ble High Court by its order dated 18.07.2022 has been pleased to admit the appeal and has granted stay of the order of this Tribunal, pending before the High Court. Accordingly, ld. AR prays that interest granted should not be more than the notified rate.
10. Having considered the rival contentions, I find that in view of the precedent decisions, the appellant is 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. Accordingly, I hold that the appellant is entitled to interest from 23.09.2015 till the date of grant of refund i.e. 11.03.2021. As regards the rate of interest, I hold that interest is payable @12% P.A. following the ruling of Hon’ble Supreme Court in Sandvik Asia Ltd. (supra). The appeal is allowed.
(Dictated and pronounced in open Court).
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