2021 (11) TMI 759 - AT - Customs

Interest on refund - relevant time - to be calculated from expiry of three months after passing of the Tribunal s final order or it has to be calculated from the date of final order of the tribunal - rate of interest should be 6% or 15% or any other rate - entitlement of interest on interest - HELD THAT - In the earlier round of litigation in the same case this tribunal in the order No A/1641/WZB/AHD/08 dated 19.08.2008 2008 (8) TMI 731 - CESTAT, AHMEDABAD held that interest liability arises from the date of the order of the tribunal and not the date of judgment of the Hon ble Supreme Court - In the above order of the tribunal though the order of the commissioner(Appeals) was upheld but at the same time it was stated that interest liability arises from the date of order of the tribunal. Rate of interest - HELD THAT - The rate of interest is statutorily prescribed under section 27 (A) read with Notification issued there under according to which 6% as rate of interest was prescribed. The departmental officer is bound to follow the statutory provision strictly and therefore, no interest more than 6% can be calculated. Even this tribunal which is creature under the statute of Customs Act cannot decide the rate of interest out of the statutory provisions. Accordingly, the rate of interest i.e. 6% decided by the Lower Authority is correct and legal - Learned Commissioner (Appeals) has rightly held that the Adjudicating Authority has rightly applied simple rate of interest as 6% P.a. Therefore, the assesseee cannot be granted interest at the rate of 15% or any other rate above 6%. Entitlement of interest on interest amount - HELD THAT - Learned Commissioner (Appeals) has concluded that being a creature of the statute he has no power to allow interest on interest amount to the appellant. There are no infirmity in the above finding. Even this Tribunal also being a creature under statute of customs Act cannot decide anything beyond the provisions of the statue of the Customs Act. There is no statutory provision for granting the interest on interest. Therefore, the decision on this issue by the Learned Commissioner (Appeals) is legal and correct - we concur with the Commissioner (Appeals) on the issue of rate of interest and interest on interest. Appeal is partly allowed.

Summary

Issues involved:
1. Calculation of interest on refund from the date of the tribunal's final order or from the date of the tribunal's final order.
2. Determination of the appropriate rate of interest at 6%, 15%, or any other rate.
3. Entitlement of the appellant to interest on interest.

Analysis:

Issue 1 - Calculation of interest on refund:
The Tribunal held that interest liability arises from the date of the tribunal's final order and not from the date of the judgment of the Hon'ble Supreme Court. The Hon'ble High Court also affirmed this view, emphasizing that interest should be calculated from the date of the tribunal's order. Since this finding was not challenged by the revenue, it was deemed final. Consequently, the appellant is entitled to interest from the date of the tribunal's order and not from the expiry of three months from the order date.

Issue 2 - Determination of the rate of interest:
The statutory provision under section 27(A) prescribed a 6% rate of interest, which the departmental officer is obligated to adhere to strictly. The Tribunal clarified that it cannot decide a rate of interest beyond the statutory provisions and cited that judgments allowing higher interest rates were based on the inherent powers of the Supreme Court or High Court. Therefore, the Tribunal upheld the 6% interest rate determined by the Lower Authority and rejected the appellant's claim for a higher rate.

Issue 3 - Entitlement to interest on interest:
The appellant sought interest on interest amount, relying on a Supreme Court judgment. However, the Learned Commissioner (Appeals) concluded that there is no statutory provision for granting interest on interest. The Tribunal concurred with this view, stating that it cannot go beyond the provisions of the Customs Act. As a result, the decision to deny interest on interest by the Learned Commissioner (Appeals) was deemed legal and correct.

In summary, the Tribunal modified the impugned order, partially allowing the appeal by concurring with the Commissioner (Appeals) on the rate of interest and interest on interest issues but disagreeing on the calculation of interest on refund issue. The appeal was partly allowed based on the above terms.