2015 (2) TMI 1120 - AT - Customs

Claim of Interest on delayed refund of duty paid in excess - earlier the amount of refund was credited to the Consumer Welfare Fund - Held that - assessee importers are entitled to the interest on refund after three months from 7.2.2006 till the date of grant of refund i.e from 7.5.2006 to 1.1.2008. - Decided in favor of assessee.

Summary

Issues:
1. Provisional assessment of imported goods
2. Refund of excess duty paid
3. Granting of interest on refund
4. Interpretation of Sections 18(3) and 18(4) of the Central Excise Act

Provisional Assessment of Imported Goods:
The case involved the import of poppy seeds where the transaction value was rejected, and the goods were provisionally assessed at a higher value. The matter was remanded for de novo adjudication, and eventually, the transaction value was accepted. The issue was finalized with no appeals, leading to a refund application by the importer.

Refund of Excess Duty Paid:
The importer filed a refund application for the excess duty paid due to the provisional assessment. The Assistant Commissioner granted the refund but credited it to the Consumer Welfare Fund citing unjust enrichment, which was challenged by the importer. The Commissioner (Appeals) later directed the refund to the importer with interest, leading to further appeals by the Revenue.

Granting of Interest on Refund:
The main contention was regarding the grant of interest on the refund amount. The Commissioner (Appeals) allowed interest from a specific date, which was challenged by both the Revenue and the importer. The importer sought compensatory interest from the date of deposit, relying on legal precedents supporting interest for delayed refunds in commercial cases.

Interpretation of Sections 18(3) and 18(4) of the Central Excise Act:
The parties presented arguments based on the provisions of Section 18, specifically sub-sections (3) and (4), regarding the entitlement to interest on refunds. The dispute revolved around the applicability of these provisions to the case, considering the timeline of events and the insertion of relevant clauses in 2006.

In the final judgment, the Tribunal held that the importer was entitled to interest on the refund from a specific date after the finalization of the liability. The appeals by the importer were allowed, directing the Revenue to grant the interest within a specified timeframe. The request for commercial interest was rejected, emphasizing adherence to the prescribed rates. The appeals by the Revenue were dismissed, concluding the case in favor of the importer.