2011 (4) TMI 496 - AT - Customs

Interest under Section 28AB - The issue canvassed by the appellant-importer, was that they are entitled for interest @ 12% on delayed refund instead of 6% allowed in the impugned order - notice that appellants deposited amount in September, October and in November 2004, as per the directions of the department. In September 2004, the Hon ble Gujarat High Court had dismissed the SCA was dismissed in September 2004 and SLP was filed in the Hon ble Supreme Court in October 2004. In July 2005, the Hon ble Supreme Court ordered that if the amount directed to be deposited by the Tribunal is deposited, the appeals before the Tribunal has to be restored and decided on merits. In these circumstances, the amount deposited by the appellant is to be treated as pre-deposit since the matter had not attained finality during the relevant period - Therefore, refund is to be treated as refund of pre-deposit made when the appeal was pending - There is no dispute that the amounts deposited is duty but this is not the issue which has been taken into account while precedent decisions have allowed the interest at 12% on the refunds claimed in respect of pre-deposit - Therefore, following the judicial discipline, consider it appropriate that interest in this case also is to be allowed @ 12% - Decided in favour of assessee.

Issues involved:
1. Appeal against Order-in-Appeal and Order-in-Original for duty refund with interest under Customs Act, 1962.
2. Provisional assessment finalization of imported vessels for breaking purposes and demand for differential duty.
3. Entitlement to interest rate on delayed refund, unjust enrichment test, and applicability of CESTAT's final order.
4. Treatment of deposited amount as pre-deposit and interest rate on refunds.
5. Consistency in interest rate application and judicial discipline.

Analysis:

1. The appeal before the Tribunal sought to overturn the Order-in-Appeal and Order-in-Original related to the refund of duty amounting to Rs.6,98,063/- with interest of Rs.1,34,258/- under Section 28AB of the Customs Act, 1962. The issue primarily revolved around the return of the duty amount and interest as per the Customs Act provisions.

2. The case involved the provisional assessment and finalization of 11 imported vessels for breaking purposes, leading to a demand for differential duty. The appellant had paid the required duty amount during the specified period. The matter had been under litigation since February 1992, and the issue had been scrutinized through various legal forums. The Order-in-Original was passed based on a previous CESTAT order, highlighting the necessity to examine the unjust enrichment aspect as per a Supreme Court decision.

3. The original adjudicating authority sanctioned the refund and interest, which was appealed by both the importer and the Revenue to the Commissioner (Appeals). The appellant-importer argued for a higher interest rate on delayed refunds, while the Revenue contended that the refund should pass the unjust enrichment test. The Commissioner (Appeals) rejected the appeals, citing previous Tribunal orders and settled issues in similar cases.

4. The Tribunal's order emphasized the treatment of the deposited amount as a pre-deposit during the pending appeal period, warranting a higher interest rate of 12% on the refunds claimed in connection with the pre-deposit. The decision aimed to maintain consistency with previous judicial precedents and allowed the interest at 12% in this case as well.

5. Upholding judicial discipline and consistency, the Tribunal rejected the department's appeal and considered the cross objections submitted by the respondents. The decision underscored the importance of following established legal principles and maintaining uniformity in interest rate application in similar cases to ensure fairness and adherence to legal standards.

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