2015 (4) TMI 1071 - AT - Customs

Refund claim of interest - Under Section 28AA - Appellant was asked to pay interest on delayed payment of duty under Section 28AA of the Customs Act 1962 with effect from 29-9-2003 i.e. three months after the date of passing of the Order-in-Original and the Department started processing Bills of Entry in year 2005 and therefore therefore he claimed that the interest should not have been demanded and recovered before finalizing Bills of Entry in the year 2005 - Held that the interest becomes chargeable after three months from the date of determination of duty chargeable. Here the determination of duty chargeable happened on the date (30-5-2003) of Order-in-Original. Therefore charging of interest w.e.f. 29-9-2003 is clearly in conformity with the provision of said Section 28AA. Also the grant of stay by the CESTAT against the operation of said Order-in-Original and the vacation thereof subsequently do not in any way alter the date of determination of duty chargeable which remained the date of the adjudication order. Therefore refund claim not granted. - Decided against the appellant

Issues:
1. Appeal against rejection of refund claim seeking refund of interest paid.
2. Appellant's contention regarding the demand and recovery of interest.
3. Applicability of Section 28AA of the Customs Act, 1962.
4. Contesting the finding of the adjudicating authority.
5. Interpretation of Section 28AA regarding the chargeability of interest.
6. Effect of the grant and vacation of stay by CESTAT on the determination of duty chargeable.
7. Commissioner's observation on charging interest from the date of seizure in 2001.

Analysis:

1. The appeal was filed against the rejection of the refund claim seeking a refund of interest paid by the appellant. The Order-in-Appeal upheld the Order-in-Original, which led to the rejection of the refund claim amounting to Rs. 1,58,21,959.

2. The appellant imported goods and filed Bills of Entry in July 2001. Subsequently, due to misdeclaration concerns, the goods were seized, and the case was adjudicated in 2003. The appellant contended that interest on delayed payment of duty should not have been demanded before finalizing Bills of Entry in 2005.

3. The appellant's refund claim was based on Section 28AA of the Customs Act, 1962, arguing that interest should not have been demanded before processing Bills of Entry in 2005, as the duty determination occurred in 2003.

4. During the hearing, the appellant reiterated their contention regarding the demand and recovery of interest.

5. The Tribunal noted that the interest was paid on various dates, and most of the refund claims were time-barred under Section 27 of the Customs Act, 1962, except for the first and last payments of interest. This finding was not contested by the appellant.

6. Section 28AA of the Customs Act states that interest becomes chargeable three months after the determination of duty. The date of duty determination was the Order-in-Original date in 2003, irrespective of the stay granted and vacated by CESTAT. The Commissioner's view on charging interest from the date of seizure in 2001 was deemed irrelevant to the current issue.

7. Considering the above analysis, the Tribunal found no merit in the appeal and dismissed it, upholding the decision regarding the rejection of the refund claim for interest paid by the appellant.

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