Pre-deposit refund interest accrues only after three months from appellate disposal, where duty and penalty were treated as a pre-deposit.

Duty and penalty deposited during the pendency of an appeal, and appropriated by the department, were treated as a pre-deposit linked to the appellate proceedings. The applicable principle was that such pre-deposits must be returned within three months from the date of disposal of the appeal, and interest on delayed refund becomes payable only after that period. An earlier grant of interest from a prior date was incorrect on these facts, so the interest direction was modified to run only after the stipulated three-month period from appellate disposal.

---

---

Issues: Whether the amount deposited by the respondent was in the nature of pre-deposit and whether interest on its refund was payable only after three months from the date of disposal of the appeal.

Analysis: The respondent had deposited duty and penalty during the pendency of the appeal, and the amount was appropriated by the department. On that footing, the deposit was treated as a pre-deposit linked to the appellate proceedings. The applicable principle, as noticed from the Supreme Court decision and the Board circular, was that pre-deposits are to be returned within three months from the date of the appellate order, and interest becomes payable only after that period if refund is delayed. The Commissioner (Appeals) had granted interest from an earlier date, which was not correct on these facts.

Conclusion: The amount was a pre-deposit and interest was payable only after three months from the date of disposal of the appeal by the Commissioner (Appeals).

Final Conclusion: The order granting interest was modified so that interest would run only after the stipulated three-month period from the appellate disposal date.

---