2023 (2) TMI 1049 - AT - Customs

Tribunal Grants Interest on Refund: Importance of Procedural Fairness

The Tribunal allowed the appeal, granting interest on the refund amount at 12% P.A. The appellant's payment of duty under protest established their ... Interest on the refund of differential duty deposited for the purpose of clearance, being successful in appeal - price escalation clause - consent given by the appellant to the enhancement made by the department in the value of the declared goods at the time of processing of the Bill of Entry or not - Revenue urges that deposit of differential duty without making a prior protest, amounts to acceptance or consent on the part of the appellant. HELD THAT:- It is an accepted fact that appellant had deposited the differential duty as ordered by revenue, but have immediately filed the appeal and thus, the payment of differential duty was under protest, ipso facto. It is further found that such claim of the appellant of payment under protest was accepted by the Commissioner (Appeals) who remanded the matter for re-adjudication under Section 17(5) of the Act, by order dated 26.11.2013. In this view of the matter, the appellant is entitled to grant of interest on the refund amount under Section 129EE of the Act. Hon’ble Supreme Court in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [2006 (1) TMI 55 - SUPREME COURT], which have been followed by Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS & SERVICE TAX, NOIDA (VICE-VERSA) [2021 (5) TMI 870 - CESTAT ALLAHABAD], grant of interest @ 12% P.A. has been upheld by Hon’ble Punjab & Haryana High Court in the case of COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS M/S RIBA TEXTILES LIMITED [2022 (3) TMI 693 - PUNJAB & HARYANA HIGH COURT], wherein interest was granted @ 12% P.A. Accordingly, I allow the appeal and set aside the impugned order. Thus interest is granted from the date of deposit till the date of refund @ 12% P.A. under Section 129EE of the Act, within 45 days of receipt of this order by the Adjudicating Authority - appeal allowed. Issues involved: Entitlement to interest on refund of differential duty deposited for clearance after being successful in appeal.Analysis:1. Issue of entitlement to interest on refund: The appellant imported goods and paid duty as per assessed Bills of Entry, later appealing against the enhanced value assessment. The Commissioner (Appeals) set aside the enhancement and remanded the matter for re-adjudication. The appellant then applied for a refund of the differential duty deposited, which was granted without interest. The appellant contended that the duty was paid under protest, making them eligible for interest on the refund under Section 129EE of the Act. The revenue argued that depositing duty without prior protest implied consent. The Tribunal found that the appellant had paid the duty under protest, as accepted by the Commissioner (Appeals) and granted interest on the refund amount at 12% P.A. citing relevant legal precedents. The Tribunal set aside the impugned order and directed the grant of interest within 45 days of the order.2. Legal considerations: The Tribunal relied on the provisions of Section 129EE of the Act, which allows for interest on refunds. Additionally, the Tribunal referenced the ruling of the Hon'ble Supreme Court in Sandvik Asia Ltd vs. Commissioner of Income Tax-I and the decision of the Hon'ble Punjab & Haryana High Court in Riba Textiles Ltd. to support the grant of interest at 12% P.A. The appellant's argument of paying duty under protest was crucial in establishing their entitlement to interest on the refund, as it indicated a lack of consent to the enhanced value assessment.3. Decision and direction: The Tribunal allowed the appeal, emphasizing the appellant's right to interest on the refund amount due to the payment being made under protest. By setting aside the impugned order and directing the grant of interest at 12% P.A., the Tribunal ensured compliance with the legal provisions and relevant judicial precedents. The decision highlighted the importance of procedural fairness and the principle of natural justice in matters of duty assessment and refund entitlement.4. Conclusion: The judgment clarifies the criteria for determining entitlement to interest on duty refunds, emphasizing the significance of protesting duty payments to establish a claim for interest. By citing relevant legal provisions and precedents, the Tribunal provided a comprehensive analysis supporting the appellant's right to interest on the refund amount. The decision underscores the importance of procedural adherence and fairness in customs matters, ensuring that rightful claims for refunds are duly recognized and compensated.