9911796707
TMI Blog2013 (7) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... determination in this case is whether interest can in law be directed to be paid on a delayed refund of a predeposit made before the CESTAT during the pendency of an appeal, when the appeal results in the action of the Department being set aside. 3. The Petitioners were the Appellants before the Customs, Excise and Service Tax Appellate Tribunal against an order of adjudication passed on 25 February 2008 by the Commissioner of Customs, Mumbai imposing penalties of Rs.7.50 crores and Rs.50.00 lakhs respectively under Clauses (a) and (b) of Section 112 of the Customs Act, 1962. Initially, an order of adjudication had been passed in pursuance of a notice to show cause dated 9 May 1989. The order of adjudication dated 8 August 1989 had resulte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02469. These deposits were effected in compliance with the order of the Tribunal dated 1 October 1990. The Petitioners annexed to the refund applications copies of the order of the Tribunal dated 29 May 2012 and TR-6 challans dated 20 December 1990. A deficiency memo was issued to the Petitioners on 30 August 2012 to submit : (i) the original of the order of adjudication passed by the Commissioner of Customs; (ii) the original of the order of the CESTAT dated 29 May 2012; (iii) the original of the DDR dated 20 December 1990 in respect of the payments of pre-deposit of Rs.20.00 lakhs and Rs.5.00 lakhs; and (iv) attested copies of the passport. 5. By a communication dated 18 October 2012, the Petitioners stated that the original copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication to the Assistant or Deputy Commissioner of Customs before the expiry of one year from the date of payment of duty and/or interest. Clause (b) of sub-section 1-A of Section 27 provides that where duty becomes refundable as a consequence of a judgment, order or direction of the appellate authority, Tribunal or the Court, the limitation of one year shall be computed from the date of such judgment, order or direction. Under sub-section 2 of Section 27, on receipt of an application, the Assistant or the Deputy Commissioner is required to make an order of refund if he is satisfied that the whole or any part of the duty and interest, if any, paid by the applicant is refundable. Section 27-A, which deals with the payment of interest on del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal under the Central Excise Act, 1985 was, on the assessee being ultimately successful, refundable to the assessee with interest. The Tribunal had in diverse orders issued directions for the payment of interest on refunds of pre-deposit. Before the Supreme Court, the Solicitor General stated that the Central Board of Excise and Customs proposed to issue a circular in connection with the payment of interest on all such pre-deposits, a draft of which was placed on the record of the Supreme Court. The Supreme Court directed the payment of interest in terms of the draft circular. A circular was issued by the CBEC on 8 December 2004 reiterating that in terms of the directions of the Supreme Court, pre-deposits must be returned within three mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation correctly assumed by the Revenue of returning pre-deposits within a reasonable period (three months being what the statute has prescribed) and of allowing interest where this obligation is breached for a reason not bearing on the conduct of the assessee. Looked at from another perspective, this subserves the requirement of fairness which every statute must observe to be in accord with Article 14 of the Constitution. If the rule of law is to be observed, the State can never assert that it will hold on to monies paid towards pre-deposits for interminably long periods. If that were to be allowed, pre-deposits could be held up for refund for years together despite the success of an assessee in appeal. Such a consequence would be unac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund was delayed beyond the period of three months from 18 October 2012. Consequently interest would be payable with effect from 18 January 2013 at the rates stipulated in the relevant notifications under Section 27-A. We have not accepted the wider contention that interest on the pre-deposit should be paid with effect from the date of deposit (20 December 1990). There is neither a statutory nor administrative basis for such a claim. Besides, the pre-deposit is towards the amount due under the order which is in appeal before the Tribunal. The pre-deposit becomes refundable as a consequence of the order of the Tribunal. Hence, the claim for interest during the pendency of the appeal cannot be allowed. 12. We accordingly make rule absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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