2020 (2) TMI 10 - AT - Customs

Interest on account of delayed sanctioned of refund - HELD THAT - The deposit that has been made by the Appellant is required to be returned with interest in terms of provisions of Customs Act read with CBEC Circular No. 984/08/2014-CX dated 16/09/2014 - In view of instruction from CBEC, which is binding on the adjudicating authority and also the legal provisions of Section 27 of the Customs Act which mandates the Department to grant interest on refund to the Appellant which has not been done in this case. This is a case of pure harassment to the Appellant by the Departmental Officer in order to get the legitimate due from the Department. The amount of deposit during investigation has been taken illegally and retained by the Department due to callous attitude of the departmental officer including that of Commissioner (Appeals), who has acted contrary to provisions of Customs Act and also against the directions given by the Central Board of Customs and Excise. Interest is required to be granted to the Appellant for the delayed refund for deposit during investigation as per law - Appeal allowed.

Summary

Issues:
- Appeal against rejection of interest refund on deposited amount during investigation.

Analysis:
The case involved an appeal challenging the rejection of an interest refund claimed by the Appellant on an amount deposited during an investigation. The Appellant had imported secondary material under the guise of 'Tinplate Prime' to pay a lower amount of customs duty. The investigation led to a deposit of ?25 Lakhs pending further inquiry. Show Cause Notices were issued, and after a series of legal proceedings, the demand on the Appellant was found unsustainable, leading to the refund of the deposit. However, the interest on the refunded amount was not granted, prompting the Appellant to file a claim for interest on the delayed refund. The claim was rejected, leading to the current appeal.

The primary issue in this case was the sanction of interest on the delayed refund for the deposit made during the investigation. The Tribunal noted that after prolonged litigation, the demand on the Appellant was deemed unsustainable, warranting the refund of the deposit. Referring to provisions of the Customs Act and a CBEC Circular, the Tribunal highlighted the entitlement of the Appellant to interest on the refunded amount. The Circular emphasized that in cases where the appellate authority rules in favor of the appellant, interest on the refund should be paid promptly, irrespective of the Department's intention to challenge the decision.

The Tribunal, guided by the CBEC Circular and legal provisions, criticized the Department for not granting interest on the delayed refund, labeling it as harassment towards the Appellant. The Tribunal deemed the retention of the deposit during the investigation as illegal and criticized the departmental officers for their actions contrary to the Customs Act and CBEC directives. Consequently, the Tribunal held that interest should be granted to the Appellant for the delayed refund, emphasizing the Department's obligation to adhere to the law and provide timely relief to the taxpayer.

In conclusion, the Tribunal allowed the appeal, emphasizing the Department's duty to grant interest on the delayed refund in accordance with legal provisions and directives. The judgment highlighted the importance of upholding taxpayer rights and ensuring compliance with statutory obligations, ultimately ruling in favor of the Appellant and ordering the grant of interest on the refunded amount.