2010 (9) TMI 400 - AT - Customs

Interest on delayed refund - appellants deposited amount in September, October and in November 2004, as per the directions of the department - High Court had dismissed the SCA filed by the appellants against the order of the Tribunal rejecting the appeal for failure to make the pre-deposit - appeals before the Tribunal to be restored and decided on merits - amount deposited by the appellant to be treated as pre-deposit since the matter had not attained finality during the relevant period - refund to be treated as refund of pre-deposit made when the appeal was pending - interest allowed @ 12%

Summary

Issues:
Refund of pre-deposit and applicable interest rate.

Analysis:
The appellants, engaged in ship breaking, filed bills of entry for ships imported for breaking, leading to litigation over pre-deposit requirements. Despite depositing a substantial amount, an issue arose regarding the interest rate on the refund. The Tribunal previously allowed interest from a specific date, but the current appeal sought a higher interest rate. The advocate argued that the refund of pre-deposit falls outside Section 27A, making the 6% interest rate notification inapplicable. Citing various decisions, including those by the Apex Court, the advocate contended for a 12% interest rate.

The Departmental Representative (DR) argued that the duty was deposited, not pre-deposited, hence Section 27A applied, warranting a 6% interest rate. The Tribunal analyzed the timeline of deposits, court orders, and the nature of the amounts deposited. It concluded that the deposited amount should be treated as a pre-deposit since finality was not reached during that period. Although the deposited amounts were duties, previous decisions allowed a 12% interest rate on refunds related to pre-deposits. Following judicial precedent, the Tribunal directed the original authority to calculate and pay the differential interest amount at 12% to the appellants.

In summary, the Tribunal determined that the appellants' deposits constituted pre-deposits, warranting a 12% interest rate on the refund, contrary to the DR's argument for a 6% rate under Section 27A. The decision aligned with past judgments and legal principles, ensuring consistency in interest rate application on refunds related to pre-deposits.