2008 (4) TMI 618 - AT - Customs

Summary

Issues involved: Whether Revenue is required to pay interest in respect of penalty and redemption fine deposited during the pendency of the appeal.

Issue 1: Interest on penalty and redemption fine

The disputed issue in the present appeal is whether Revenue is required to pay interest in respect of penalty and redemption fine deposited during the pendency of the appeal. The relevant provision dealing with the interest is Section 27 of the Customs Act. The section specifies that interest on delayed refunds is applicable if any duty ordered to be refunded is not refunded within three months from the date of receipt of the application. It further outlines the rate of interest to be paid on such duty from the date immediately after the expiry of three months from the date of receipt of the application till the date of refund of such duty.

Issue 2: Applicability of interest provision

The provision for interest under Section 27 of the Customs Act is specifically related to the refund of duty. As redemption fine and penalty cannot be considered as duty, it can be inferred that no interest is payable on the refund of redemption fine or penalty. The appellant referred to certain decisions of the Hon'ble High Court where interest was granted on redemption fine. However, the Commissioner (Appeals) distinguished those decisions by highlighting that they were based on equity and justice, and not on the statutory provisions. Authorities under the statute derive power from the Act and are bound by its provisions. Since Section 27A mandates interest only on delayed refund of duty, the claim of interest by the appellant in respect of redemption fine and penalty has been rightly rejected by the authorities below.

In conclusion, the Appellate Tribunal upheld the decision to reject the appellant's claim for interest on redemption fine and penalty during the pendency of the appeal, as these amounts do not fall under the purview of duty as specified in Section 27 of the Customs Act.