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2024 (5) TMI 743 - HC - CustomsEntitlement to interest on the delayed refund of pre-deposit - Rate of interest - seizure of cash - Whether the Learned Tribunal is justified in law in not allowing the interest at the rate of 12 per cent per annum on the refund amount of pre-deposit? - HELD THAT - It remains undisputed that the seized cash of Rs. 9,93,200/- was made pre-deposit by order of the CESTAT dated 22.04.2000 u/s 129E of the Customs Act, 1962. Admittedly, neither there was any provision nor any notification providing for rate of interest on delayed refund of pre-deposit. The pre-deposit made on 22.04.2000 was refunded to the appellant on 05.01.2006. It is pursuant to the judgment of Hon ble Supreme Court in ITC Limited. 2004 (12) TMI 90 - SUPREME COURT that the Central Board of Excise and Customs issued the circular dated 08.12.2004 allowing payment of interest on delayed refund, but this circular also does not provide rate of interest. Hon ble Supreme Court in the case of ITC Limited, pursuant to which the aforesaid circular was issued by CBEC, directed for payment of interest @ 12% on delayed refund of pre deposit u/s 35F of the Central Excise Act, 1944, which is pari materia with the provision of Section 129E of the Customs Act. The rate of interest on delayed refund of pre-deposit shall be governed by the law laid down by Hon'ble Supreme Court in ITC Limited (supra) as well as a coordinate Bench of this Court in Madura Coats Private Limited 2012 (7) TMI 512 - CALCUTTA HIGH COURT till a statutory provision in the Act was enacted and a notification was issued thereunder providing for rate of interest on delayed refund of pre-deposit. With effect from the date on which the provision came in the statute, it shall hold the field and the rate of interest shall be governed by it. Since the period in question is prior to the notification providing for rate of interest on delayed refund of pre-deposit, issued under the Act, therefore, the case of the appellant shall be governed by the law laid down by the coordinate Bench of this Court in Madura Coats Private Limited (supra). Thus, the appeal is allowed, the impugned order Shri Rajendra Kumar Jain v. Commissioner of Customs (Port), Kolkata - 2014 (2) TMI 167 - CESTAT KOLKATA passed by the Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata is hereby set aside and it is held that the appellant is entitled for payment of interest @ 12% on the delayed refund of the amount of pre-deposit, which shall be paid by the respondents to the appellant within one month from the date of production of a certified copy of this order. The substantial question of law is answered in negative i.e. in favour of the appellant and against the respondents.
Issues: The judgment involves a substantial question of law regarding the justification of not allowing interest on the refund amount of pre-deposit under Section 129E of the Customs Act, 1962.
Facts: The case involves the seizure of a sum of Rs. 9,93,200/- by the Director of Revenue Intelligence, which was later held not liable for confiscation. The appellant filed appeals and petitions for refund, leading to a dispute over the interest rate applicable to the refund amount. Submissions: The appellant argued for interest at 12% per annum based on precedents and the absence of a specific provision for interest on delayed refunds. The respondents contended that the amount was made a pre-deposit by order of the Tribunal and that there was no provision for interest until a circular was issued following a Supreme Court judgment. Discussion and Finding: The Court noted the absence of a provision for interest on delayed refunds until a circular was issued post a Supreme Court judgment. Precedents were cited where interest at 12% was granted in similar cases. The Court held that the appellant was entitled to interest at 12% on the delayed refund, rejecting the respondent's argument based on a later notification fixing the rate at 6%. The judgment allows the appeal, setting aside the impugned order and directing the payment of interest at 12% on the delayed refund of the pre-deposit amount within one month. The substantial question of law is answered in favor of the appellant. This comprehensive summary captures the issues, facts, submissions, and the Court's discussion and finding in the judgment.
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