2026 (3) TMI 422 - AT - Customs

Interest on delayed refunds: appellate orders direct interest payable to appellant where principal refund is paid to appellant.

Where appellate orders adjudicated the principal refund payable to the appellant and rejected diversion to the Consumer Welfare Fund as unjust enrichment, ... Entitlement to interest on delayed refund in respect of the principal refund amounts already sanctioned to it by the Tribunal instead of the interest being credited to the Consumer Welfare Fund - presumption of unjust enrichment. Entitlement to interest on delayed refund - HELD THAT: - The Tribunal held that interest had been denied earlier solely because the principal refund had been directed to be credited to the Consumer Welfare Fund. Having decided that the principal amounts in the four refund applications must be paid to the appellant and not credited to the Consumer Welfare Fund, the logical and legal consequence is that the appellant becomes entitled to interest on the delayed payment of those refunds. This conclusion is consistent with the view expressed by the Commissioner (Appeals) in respect of the fifth refund application, where interest was sanctioned once the principal was ordered to be paid to the appellant. The Tribunal accordingly set aside the impugned order insofar as it denied interest and directed payment of interest in accordance with law on the principal amounts already sanctioned. [Paras 11, 12, 13] The appellant is entitled to payment of interest in accordance with law on the principal amounts already sanctioned in respect of the four refund applications. Final Conclusion: The impugned order is set aside insofar as it denied interest; the four appeals are allowed and the appellant is entitled to interest on the sanctioned principal amounts in accordance with law. Issues: Whether the appellant is entitled to payment of interest in respect of the principal refund amounts already sanctioned to it by the Tribunal instead of the interest being credited to the Consumer Welfare Fund.Analysis: The question turns on entitlement to interest where the principal refund has been directed to be paid to the appellant rather than credited to the Consumer Welfare Fund. Earlier orders had diverted sanctioned principal to the Consumer Welfare Fund on a presumption of unjust enrichment, and interest was accordingly not credited to the appellant. Subsequent appellate decisions set aside the direction to credit the principal to the Consumer Welfare Fund and ordered the principal to be paid to the appellant; in one connected refund the Commissioner (Appeals) explicitly directed that interest, if payable as per law, shall be paid to the appellant. Given that the principal has been adjudicated to be payable to the appellant and the ground for diversion (unjust enrichment) has been rejected by the appellate forum, the legal entitlement to interest on delayed refund follows the payment of the principal as determined by the appellate orders.Conclusion: The appeals are allowed and the appellant is entitled to payment of interest in accordance with law on the principal amounts already sanctioned for the specified refund applications; the impugned order is set aside to that extent (interest to be credited to the appellant).