Court-directed deposits follow the terms of the order, and statutory refund rules cannot defeat interest payable on refund.

A deposit made under a court's interim order is governed by that order, not by the ordinary refund machinery under the Customs Act. Where the order required refund forthwith with applicable interest if the appeal succeeded, the department could not re-characterise the deposit as duty or insist on a refund claim under Section 27 to defeat interest. The time limit in Section 27A could not override the judicial direction. The amount deposited during the appeal was therefore refundable with interest, and interest at 6% per annum was payable from the date of deposit until payment.

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Issues: Whether interest was payable on the amount deposited pursuant to the Supreme Court's interim order directing deposit of the disputed amount with a stipulation of refund forthwith with applicable interest if the appeal succeeded, or whether the refund and interest were governed by Sections 27 and 27A of the Customs Act, 1962.

Analysis: The amount was deposited not as duty paid under the refund machinery of the Customs Act, 1962, but pursuant to a specific judicial direction issued in the pending civil appeal. The interim order itself governed the consequences of the deposit and required refund forthwith with applicable interest on success of the appeal. In such a situation, the department could not re-characterise the payment as duty or compel the assessee to seek refund under Section 27 of the Customs Act, 1962. The interest condition in the judicial order was binding and could not be diluted by invoking the time limit under Section 27A of the Customs Act, 1962. The amount deposited during the pendency of the appeal was also not liable to be treated as duty merely because it was described in the refund correspondence as differential duty. The governing principle is that a deposit made under a court's order is controlled by that order and not by the ordinary statutory refund route, unless the order itself leaves the matter to the statute.

Conclusion: The amount deposited pursuant to the Supreme Court's interim order was refundable with interest, and the assessee was entitled to interest at 6% per annum from the date of deposit till payment.

Final Conclusion: The denial of interest on the Supreme Court-directed deposit was unsustainable, and the assessee succeeded in obtaining interest on the refunded amount.

Ratio Decidendi: A deposit made in obedience to a court's conditional order is governed by the terms of that order, and when the order directs refund with applicable interest upon success of the appeal, the statutory refund provisions for duty cannot be used to deny that interest.

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