Customs pre-deposit refund delayed six years entitles appellant to 12% interest under Section 129E

The Calcutta HC allowed an appeal regarding interest on delayed refund of pre-deposit under Section 129E of the Customs Act, 1962. The appellant's seized cash of Rs. 9,93,200 was pre-deposited on 22.04.2000 and refunded on 05.01.2006. Though no statutory provision existed for interest rate on delayed refunds, the HC relied on SC precedent in ITC Limited and coordinate bench decision in Madura Coats Private Limited, holding that appellant was entitled to 12% interest on delayed refund. The CESTAT order was set aside, directing respondents to pay interest within one month.

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Issues: The judgment involves a substantial question of law regarding the justification of not allowing interest on the refund amount of pre-deposit under Section 129E of the Customs Act, 1962.

Facts: The case involves the seizure of a sum of Rs. 9,93,200/- by the Director of Revenue Intelligence, which was later held not liable for confiscation. The appellant filed appeals and petitions for refund, leading to a dispute over the interest rate applicable to the refund amount.

Submissions: The appellant argued for interest at 12% per annum based on precedents and the absence of a specific provision for interest on delayed refunds. The respondents contended that the amount was made a pre-deposit by order of the Tribunal and that there was no provision for interest until a circular was issued following a Supreme Court judgment.

Discussion and Finding: The Court noted the absence of a provision for interest on delayed refunds until a circular was issued post a Supreme Court judgment. Precedents were cited where interest at 12% was granted in similar cases. The Court held that the appellant was entitled to interest at 12% on the delayed refund, rejecting the respondent's argument based on a later notification fixing the rate at 6%.

The judgment allows the appeal, setting aside the impugned order and directing the payment of interest at 12% on the delayed refund of the pre-deposit amount within one month. The substantial question of law is answered in favor of the appellant.

This comprehensive summary captures the issues, facts, submissions, and the Court's discussion and finding in the judgment.

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