Customs refund interest runs only after the refund application period, and interest on interest is beyond tribunal powers.

Interest on customs refund becomes payable only if the refund is not granted within three months from the date of the refund application, not from the earlier date of deposit made during investigation. The governing rule under the Customs Act links interest to delay beyond that statutory period after the refund claim is filed, even where the underlying refund arises only after a favourable appellate order. The Tribunal also lacks statutory authority to award interest on delayed payment of interest; such relief may arise only in writ jurisdiction on special facts, not in proceedings under the Act.

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Issues: (i) Whether interest on the refund was payable from the date of deposit made during investigation or only after expiry of three months from the date of filing the refund application; (ii) Whether the Tribunal could grant interest on delayed payment of interest.

Issue (i): Whether interest on the refund was payable from the date of deposit made during investigation or only after expiry of three months from the date of filing the refund application

Analysis: The refund became due only after the appellate order in favour of the importer, and the governing principle was that interest under Section 27A of the Customs Act, 1962 becomes payable when the refund is not granted within three months from the date of the refund application. As the application was filed on 29.09.2007 and the refund was sanctioned on 15.02.2008, the delay beyond the statutory period attracted interest, but not from the earlier date of deposit.

Conclusion: Interest was payable only after expiry of three months from the date of filing the refund application, not from the date of deposit.

Issue (ii): Whether the Tribunal could grant interest on delayed payment of interest

Analysis: The claim for interest on interest was unsupported by the tribunal's statutory powers under the Customs Act, 1962. Such relief was treated as available in writ jurisdiction on special facts, but not as a relief that the Tribunal could grant while acting within the confines of the Act.

Conclusion: The Tribunal could not grant interest on delayed payment of interest.

Final Conclusion: The Revenue succeeded in part by limiting the refund interest to the statutory period after the refund application, and the cross objection seeking a larger or additional interest component failed.

Ratio Decidendi: Interest on customs refund is payable only after the expiry of three months from the date of the refund application, and the Tribunal cannot award interest on interest in the absence of statutory authority.

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