Delayed refund of pre-deposit attracts automatic interest after the three-month refund period expires.

Interest on delayed refund of a pre-deposit becomes payable where the refund is not sanctioned within three months of the Tribunal's final order. The amount was treated as a pre-deposit made during investigation, not as regular duty payment, so the three-month period for refund applied. The absence of a separate claim did not defeat interest, because liability arises automatically for delay beyond the prescribed period. Interest was therefore payable from three months after the final order until the refund was actually sanctioned and paid.

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Issues: Whether interest was payable on the delayed refund of the pre-deposit amount from the expiry of three months after the Tribunal's final order until actual sanction and payment.

Analysis: The amount of Rs. 2 crores was treated throughout as a pre-deposit made during investigation and not as regular duty payment. Reliance was placed on the principle that refund of such amounts must be completed within three months from the final disposal of the dispute, failing which interest becomes payable for the delayed period. The absence of a separate claim was held immaterial because interest on delayed refund follows automatically from the delay beyond the prescribed period.

Conclusion: Interest was payable from the date three months after the Tribunal's final order dated 04/04/2001 until the date of sanction and payment of the refund, and the rejection of interest was unsustainable.

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