2021 (4) TMI 851 - AT - Customs

Refund claim - undue availment of DEPB - grant of interest - Section 27 of the Customs Act, 1962 - HELD THAT - The department has not filed any appeal against the order passed by the original authority sanctioning the refund of ₹ 25 lakhs. In the appeal filed by the appellant seeking relief of interest, Commissioner (Appeals) has gone to the extent of disallowing the refund that has been already granted. The department has no case that in the cross appeal filed by them they have challenged the sanction of refund. It is seen from the SCN that the amount was voluntarily deposited during the investigation. When the adjudicating authority has dropped proceedings then there is no confirmation of demand against the appellant which would give the amount the character or colour of duty. The amount remains to be a deposit only. Therefore, the refund claim filed under Section 129E of the Customs Act is legal and proper. Grant of interest - HELD THAT - The appellant is eligible for interest on the amount deposited from the date of deposit till the date of payment. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of interest on refund claim of ?25 lakhs.
2. Validity of the sanction of refund under Section 129E of the Customs Act, 1962.

Analysis:

Issue 1: Denial of interest on refund claim of ?25 lakhs
The appellant filed a refund claim of ?25 lakhs after the original authority dropped the proceedings initiated by the D.R.I for over invoicing and undue availment of DEPB benefits. The refund was allowed but without granting any interest. The Commissioner (Appeals) set aside the refund sanction, holding that the amount was paid as duty and should be considered under Section 27 of the Customs Act, 1962. The appellant argued that the deposit was made voluntarily during the investigation and not towards any duty liability. The original authority had correctly sanctioned the refund, and the department had not challenged this decision. The Tribunal observed that the Commissioner (Appeals) erred in holding that the amount was deposited towards duty liability, and the act of setting aside the sanctioned refund was unjustified. The Tribunal held that any deposit with the department must be refunded with interest from the date of deposit, as per Section 129EE of the Customs Act.

Issue 2: Validity of the sanction of refund under Section 129E of the Customs Act, 1962
The appellant contended that the amount of ?25 lakhs was deposited during the investigation and not towards any duty liability. As there was no confirmation of demand against the appellant, the amount retained its character as a deposit. The appellant filed the refund claim under Section 129E of the Customs Act, which was deemed legal and proper. The Tribunal agreed with this argument, stating that the amount remained a deposit only, and the refund claim was valid. Additionally, the Tribunal highlighted the provision of Section 129EE, which mandates the payment of interest on delayed refunds. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the denial of interest on the refund claim was unjustified, and the sanction of refund under Section 129E of the Customs Act was valid. The Tribunal emphasized the obligation to refund any deposit with interest and provided relief to the appellant in this regard.