2012 (11) TMI 730 - AT - Customs

Refund of Interest - claim of interest on refund of interest - adjudicating authority sanctioned interest at the rate of 6% - held that - Order of Commissioner (Appeals), in terms of which interest of Rs.52,631/- was sanctioned to the respondents stand set aside by the Tribunal and inasmuch as the proceedings have been kept alive by the Revenue by filing the appeals before the Tribunal - impugned order of Commissioner (Appeals) is required to be set aside - appeal filed by Revenue is allowed.

Summary

Issues:
1. Refund of interest amount paid by respondents.
2. Appeal against the order allowing interest on interest.
3. Appeal regarding the interest sanctioned at a lower rate.

Analysis:
1. The case involved a dispute where the respondents imported cloves but failed to file the Bill of Entry for clearance within the stipulated time. As a result, the revenue demanded interest from the respondents, which was paid by them. Subsequently, the respondents claimed a refund of the interest amount deposited by them along with interest at the rate of 15%. The original adjudicating authority allowed the refund of the principal amount but rejected the request for payment of interest on that amount. On appeal, the Commissioner (Appeals) reversed this decision and allowed interest on the deposit of interest. This order was challenged by the Revenue before the Tribunal.

2. Meanwhile, the original adjudicating authority sanctioned interest at a lower rate of 6%, totaling Rs. 52,631, in accordance with the Commissioner (Appeals) order. The Revenue appealed against this sanctioned interest, but the Commissioner (Appeals) rejected the appeal, citing that the interest had already been sanctioned by the original adjudicating authority based on the previous order. The Commissioner (Appeals) also noted that the Revenue's challenge against the earlier order had not been stayed or set aside by the Tribunal. Consequently, the Revenue's appeal was dismissed, leading to it being contested before the Tribunal.

3. The Tribunal considered the previous appeal where interest on interest had been disallowed, emphasizing that there was no provision for allowing interest on interest. Given this ruling and the fact that the previous order sanctioning interest to the respondents had been set aside, the Tribunal concluded that the impugned order of the Commissioner (Appeals) needed to be overturned. Consequently, the Tribunal allowed the appeal filed by the Revenue, thereby setting aside the order allowing interest on interest and the interest sanctioned at the lower rate, in favor of the Revenue.