2015 (11) TMI 1083 - AT - Customs

Refund claim of interest paid in excess than prescribed rate - whether the appellants paid interest at a rate higher than the rate fixed by the Central Government for the period for which the interest was paid as per the directions of the Department - Held that - Rate of interest under Section 28AB of the Act was fixed at 13% p.a. vide Notification No.76/2003-CUS(NT), dated 12.09.2003 and thus evidently the appellants paid interest in excess of what was required to be paid. - There had been no Show Cause Notice requiring the appellants to show cause as to why the interest should not be demanded/recovered from 2001. Indeed, even if it is eventually held through proper process of Show Cause/adjudication that the interest was leviable from the year 2001, the refund of interest paid in excess during the period 30.09.2003 to 29.09.2005 will have to be sanctioned and only then it can be adjusted towards the interest liability arising as a result of quasi-judicial determination that the interest was chargeable/ recoverable from the year 2001. Observation of the adjudicating authority to the effect that because the interest is recoverable from the year 2001, the Department charged interest from the appellant as per law is devoid of any basis, logic or rationale. The Department demanded interest for the period 30.09.2003 upto 29.09.2005 at the rate of 15% p.a. (which the appellants paid), while the applicable rate of interest during the period was 13% p.a. as mentioned in para 5 above. Thus the amount of interest paid (@ 15% p.a.) was evidently more than the interest payable (@ 13% p.a.) and consequently the appellants were clearly entitled to (sought) refund of excess interest so paid. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Appeal against rejection of refund claims - Rate of interest on delayed payment of custom duty - Allegation of mis-declaration and concealment - Liability to pay interest from specific dates - Entitlement to refund of excess interest paid.

Analysis:
The appellants filed refund claims amounting to Rs. 21,57,655, citing the Revenue's insistence on a 15% p.a. interest rate on delayed custom duty payment, despite the prescribed rate being 13% p.a. The Revenue seized containers for suspected mis-declaration, leading to a common Show Cause Notice. The Commissioner of Customs directed the appellants to pay dues with 15% p.a. interest. The primary adjudicating authority noted the duty liability from 2001 and denied the refund, a view upheld by the Commissioner (Appeals).

The appellants argued for a refund of excess interest paid due to the higher rate. The Department contended that interest was recoverable from 2001, precluding any refund. The Tribunal focused on whether the appellants paid interest above the prescribed rate. The Department directed interest payment at 15% p.a. from 2003-2005, while the rate was 13% p.a. The Tribunal clarified that the issue was the excess interest paid, not the interest's recoverability date. No action was taken to recover interest from 2001. The Tribunal found the appellants entitled to a refund of the excess interest paid and set aside the rejection of refund claims.

In conclusion, the Tribunal allowed the appellants' refund claims, emphasizing the discrepancy between the directed interest rate and the prescribed rate. The decision highlighted the need for proper adjudication on interest recoverability dates and affirmed the appellants' entitlement to a refund of excess interest paid.