2019 (9) TMI 1166 - HC - Customs

Claim of Interest on amount deposited during investigation - amount was deposited voluntary or under coercion - amount was deposited in 2008 in installments on different dates - interest was grated from the expiry of 3 months of CESTAT order in 2003 - HELD THAT - As the amount at ₹ 28,76,578/- was not paid on 21.02.2003 by the respondents, the payment of interest starts till the actual date of payment. The amount was refunded by the respondents on 14.05.2004. Hence, at the highest, the petitioner is entitled to get interest at a reasonable rate of interest for the period running from 21.02.2003 to 13.05.2004. In fact, the petitioner is in search of payment of interest from March/May, 1998 which cannot be granted because there is no provision for the payment of interest nor the aforesaid amount was deposited under any coercion or compulsion. Moreover, the aforesaid amount was deposited by the petitioner voluntarily and, that too, prior to the issuance of the show cause notice dated 04.04.2001. There are no reason to entertain this writ petition for grant of interest from March/May, 1998 upon an amount at ₹ 28,76,578/- - petition dismissed.

Summary

Issues: Challenge to orders denying interest on amount deposited during investigation.

Analysis:
1. The petitioner challenged orders by CESTAT denying interest on the amount deposited during an investigation regarding mis-declaration of imported goods.
2. The petitioner imported fabrics with PVC backing, leading to duty evasion suspicions and a subsequent investigation.
3. During the investigation, the petitioner deposited amounts on different dates, totaling ?28,76,578.
4. After an adverse order in 2002, the petitioner appealed to CESTAT, which ruled in their favor in 2003.
5. A refund application for the principal amount and interest was made in December 2003.
6. The refund, including interest, was paid in May 2004.
7. The petitioner claimed interest from the deposit date, alleging coercion, but the court found no evidence of coercion or undue influence.
8. Precedents were cited where interest on delayed refunds was not granted unless mandated by statute.
9. The court noted the voluntary nature of the deposits and rejected the petitioner's claim for interest from March/May 1998.
10. CESTAT's order mandated interest if the amount was not returned within three months, starting from February 2003.
11. The court directed interest payment from November 2003 to May 2004 at 6% p.a. on the principal amount.
12. The petition was disposed of with these directions.