2012 (11) TMI 781 - AT - Customs

Interest on refund - importer filed a refund claim on 18-4-2006 before Development Commissioner, KASEZ. - This was transferred to Customs and finally the refund was sanctioned on 23-9-2009 but the claim for interest on the deposit with effect from three months after the date of filing of refund claim has been rejected - refund claim for interest has been rejected on the ground that the security deposit for provisional release is made as per the orders of the adjudicating authority Held that - Appellant is entitled to interest considering the date of filing the refund claim as 28-4-2006.

Summary

Issues:
1. Refund claim for interest on security deposit for provisional release of goods seized.

Analysis:
The case involved an importer who had imported goods declared as 'Stock Lot of Glass Fibre' and 'Stock Lot of Glass Fibre Yarn', which were found to be of prime quality. The importer was accused of misdeclaring the goods and under-invoicing to evade customs duty, leading to the seizure of goods. The goods were provisionally released on payment of a security deposit of Rs. 5 lakhs. Subsequently, the goods were confiscated and allowed to be redeemed on payment of a fine of Rs. 6 lakhs. The importer filed a refund claim for the security deposit, which was rejected on the grounds that such security deposit is based on estimated differential duty, penalty, and interest and can be returned only when appropriated as duty, interest, fine, or penalty. The Commissioner (Appeals) cited the decision in the case of M/s. Akai Impex Limited, which held that interest is not admissible on security deposits as per the Customs Act, 1962. Another case, Calcutta Iron & Steel Company v. C.C.E., Chennai, was also referenced to support the rejection of the interest claim.

The Tribunal analyzed the decisions cited by the Commissioner (Appeals) and noted that various other precedents had held that interest is payable on security deposits. The Tribunal referred to cases such as Jhumarmal Jain v. UOI, Nino Chaka (P) Limited v. Commissioner of Customs, and Motorola India Pvt. Limited, where interest was allowed on amounts deposited during investigations. The Tribunal also highlighted that the decision in the case of Calcutta Iron & Steel Company did not consider these precedents and that decisions rendered without taking note of such precedents should be considered as per incuriam. The Tribunal invoked the doctrine of per incuriam and held that the appellant was entitled to interest on the security deposit considering the date of filing the refund claim.

In conclusion, the Tribunal allowed the appeal and held that the appellant was entitled to interest on the security deposit for provisional release of the seized goods. The decision was based on a thorough analysis of relevant precedents and the application of legal principles such as per incuriam.