Interest on delayed customs refund follows prolonged assessment delay, with the period running from when finalisation should reasonably have occurred.

Where provisional customs assessment is left pending for an inordinate period despite the assessee furnishing documents and seeking finalisation, and the later assessment is re-determined at a lower duty resulting in refund, compensatory interest is payable because the delay is attributable to the Revenue. Interest is computed from the date by which the assessment ought reasonably to have been finalised, not from the later refund application filed after departmental inaction. On the facts noted, interest was directed from 14.11.2010 until refund, at 12% per annum.

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Issues: (i) whether the appellant was entitled to interest on the refund arising from delayed finalization of assessment, (ii) from which date such interest was payable, and (iii) at what rate interest was payable.

Issue (i): whether the appellant was entitled to interest on the refund arising from delayed finalization of assessment.

Analysis: The assessment remained pending for an inordinately long period despite the appellant furnishing the relevant documents and pursuing finalization repeatedly. The applicable customs instructions required provisional assessments to be finalized expeditiously and, ordinarily, within six months. The later appellate determination also accepted the appellant's valuation basis and re-determined the duty at the lower rate, leading to refund of the excess amount. In these circumstances, the delay was attributable to the Revenue, and the refund could not be denied interest merely by invoking the period reckoned from the refund application.

Conclusion: Interest on the refunded amount was held payable in favour of the appellant.

Issue (ii): from which date such interest was payable.

Analysis: The relevant date was linked to the point by which the assessment ought to have been finalized on the appellant's request, not the later date on which a formal refund application was filed after prolonged departmental inaction. After allowing the time that should reasonably have been taken for finalization, the delay beyond the statutory three months was treated as the period attracting interest.

Conclusion: Interest was directed to run from 14.11.2010 till the date of refund payment.

Issue (iii): at what rate interest was payable.

Analysis: The amount retained by the Revenue was treated as money wrongfully withheld for a long period, and the Tribunal applied the interest rate commonly awarded in comparable refund and deposit cases where prolonged withholding was found. On that basis, a higher compensatory rate was found appropriate.

Conclusion: Interest was held payable at 12% per annum.

Final Conclusion: The delayed finalization of assessment and consequential refund entitled the appellant to compensatory interest, and the appeal was allowed with interest granted from the specified date at the specified rate.

Ratio Decidendi: Where the Revenue fails to finalize a provisional customs assessment within a reasonable and instruction-bound period, the assessee is entitled to interest on the consequential refund, and the period for interest is computed from the date on which the assessment should reasonably have been completed, not from a later refund application filed only because of departmental delay.

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