Appellant is entitled to interest from the date of deposit to the date of refund

The CESTAT has ruled that an importer, M/s BBM Impex Pvt. Limited, is entitled to receive interest on a pre-deposited customs duty amount. The company had paid Rs. 13,50,000 for provisional release of goods. Although their appeal against the duty confirmation was successful, the refund only included the principal amount, with interest being denied. The CESTAT, referencing a Supreme Court decision, confirmed the appellant's right to interest from the date of deposit until the date the refund was issued.

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.