2014 (7) TMI 393 - AT - Customs

Clim of interest on delayed refund of interest - interest paid on warehoused goods - Following decision of Madras High Court in the case of VBC Industries Ltd. 2011 (4) TMI 142 - MADRAS HIGH COURT - Section 27A of the Customs Act would not permit to grant interest on the interest too - Decided against assessee.

Summary

Issues:
Claim for interest on delayed refund of interest amount.

Analysis:
The appellant had a private Customs bonded warehouse and filed a refund claim for interest paid on warehoused goods. The Commissioner (Appeals) allowed the claim of interest, and the appellant requested a refund of the interest amount. The refund was sanctioned under Section 27 of the Customs Act, 1962. However, the appellant filed an appeal claiming interest on the delayed refund of interest amount.

The appellant argued that the interest is compensatory in nature, and the delayed payment deprived them of using and enjoying that amount, making the department liable to pay interest on the refunded interest. They cited a decision of the Hon'ble Delhi High Court in support of their argument.

On the other hand, the Revenue's representative relied on a decision of the Division Bench of the Hon'ble Madras High Court, which held that Section 27A of the Customs Act does not permit granting interest on the interest amount.

The Tribunal found that the decision cited by the appellant was not applicable to the present case, as it pertained to interest on delayed refund of duty, which differs from the facts of this case. The Tribunal noted that the decision of the Hon'ble Madras High Court in the case cited by the Revenue was more relevant, as it held that Section 27A of the Customs Act does not allow for interest on interest.

Ultimately, the Tribunal upheld the order of the Commissioner (Appeals) and rejected the appeal filed by the appellant, based on the precedent set by the decision of the Hon'ble Madras High Court.