Interest on customs refund after bank guarantee encashment held not maintainable where statute provided no such entitlement.

Interest on refund of amounts encashed under bank guarantees during provisional assessment under the Customs Act, 1962 was held not maintainable. The earlier refund claim for the encashed amount had been rejected as premature and no appeal was filed against that rejection; the later sanction of principal refund was made without interest. The Tribunal held that the Act did not provide a basis for interest in these circumstances, and it could not award interest on equitable considerations because that would exceed its powers. Authorities cited by the appellants were distinguished as arising under different statutory regimes or in writ jurisdiction. The interest claim was therefore rejected.

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Issues: Whether the appellants were entitled to interest on the amount refunded after encashment of bank guarantees in the course of provisional assessment under the Customs Act, 1962.

Analysis: The refund claim for the amount encashed in 1998 had earlier been rejected as premature in 2008, and no appeal was filed against that rejection. The later refund of the principal amount was sanctioned without interest. The claim for interest was held to be not maintainable under the Customs Act, 1962, and the question of granting interest on equitable considerations was held to be beyond the Tribunal's powers. The cases relied upon were distinguished as arising under different statutory settings or under writ jurisdiction invoking inherent powers.

Conclusion: The appellants were not entitled to interest. The rejection of the interest claim was upheld.

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