TaxTMI 
TaxTMI 
2025 (7) TMI 1467
X X X X Extracts X X X X
X X X X Extracts X X X X
....ep Singh Bal, appellant's director and rejected the appellant's request for grant of interest on the said refundable amount under the provisions of the Customs Act, 1962. 2. The facts of the case are the appellant had undertaken exports of Indian refractory mortar under shipping bills relating to July, 2016 to August, 2020. Thereafter, investigations were initiated into the appellant's affairs by the Directorate of Revenue Intelligence and it was alleged that the appellant had actually exported Chrome Ore Concentrate (CTH 2610), in the guise of Indian Refractory Mortar, which was a restricted item under the applicable Foreign Trade Policy and attracted export duty@ 30% under the Second Schedule to the Customs Tariff Act, 1975. It was further alleged that the appellant had evaded export duty on export of Chrome Ore Concentrates by utilizing MEIS scrips. During the course of investigation, on insistence of the customs department the appellant deposited an amount of Rs.50,00,000/- through demand draft in favour of Commissioner of Customs (Port), Kolkata, on 16.10.2020. 3. Thereafter, a show cause notice was issued to the appellant on 08.03.2021 and the same was adjudicat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of Rs. 10,00,000/-. In any case, the imposition of personal penalty upon Shri Amandeep Singh Bal aforesaid has since been set aside by this Hon'ble Tribunal vide Final Order No. 75441- 75460/2025 dated 24.02.2025 (Customs Appeal No. 75404 of 2024 along with related appeals and cross objection). 6.1. The appellant also submits that the Commissioner of Customs (Appeals), Kolkata failed to read the provisions of Sections 129E and 129EE of the Act properly and correctly. It is a well settled principle of compensation, equity and restitution that requires grant of interest on the refunded sum of Rs. 40,00,000/-. It is a fact on record that the appellant had paid an amount well before issue of the Show Cause Notice and adjudication order. In the instant case, it cannot be disputed that the appellant-exporter had paid Rs. 50,00,000/- (Rs. 40,00,000/- and Rs. 10,00,000/-) at the insistence of the customs department. Thus, the customs department ought not to have retained any amount paid by an assessee without just cause. 6.2. The appellant had relied on the provisions of circular no. 984/8/2014-CX dated 16.09.2014 and the appellate authority erred by recording that such reliance on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)/482/2024 dated 15.07.2024, the Assistant Commissioner of Customs (Port), Export Department, Custom House, Kolkata, sanctioned the refund of Rs. 40,00,000/-, but he has not sanctioned interest. 9.1. I find that the issue of sanction of interest for the refund of the amount deposited during the course of investigation is no longer res integra as the Hon'ble Karnataka High Court has held in the case of Commissioner of C.Ex., Bangalore v. KVR Construction [2012 (26) S.T.R. 195 (Kar.)] that interest is payable on such refunds. The said decision has also been affirmed by the Hon'ble Apex Court. Following these decisions, this Tribunal has also granted interest @12% per annum in the case of Harrisons Industries Vs Commissioner of CGST and Central excise, Kolkata, vide FINAL ORDER NO. 76670 / 2025, dated 03.07.2025. For ready reference, the relevant para of the said decision is reproduced below : "6.4. In the present case, admittedly, the appellant had deposited Rs. 33,73,971/- towards their purported service tax liability during the course of investigations. In view of the Final order No. 75793/2021 dated 03.12.2021 of this Tribunal, allowing the appeal filed by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y other person." 18. From the reading of the above Section, it refers to claim for refund of duty of excise only, it does not refer to any other amounts collected without authority of law. In the case on hand, admittedly, the amount sought for as refund was the amount paid under mistaken notion which even according to the department was not liable to be paid. 19. According to the appellant, the very fact that said amounts are paid as service tax under Finance Act, 1994 and also filing of an application in Form-R of the Central Excise Act would indicate that the applicant was intending to claim refund of the duty with reference to Section 11B, therefore, now it is not open to him to go back and say that it was not refund of duty. No doubt in the present case, Form- R was used by the applicant to claim refund. It is the very case of the petitioner that they were exempted from payment of such service tax by virtue of circular dated 17-9-2004 and this is not denied by the Department and it is not even denying the nature of construction/services rendered by the petitioner was exempted from to payment of Service Tax. What one has to see is whether the amount paid by pet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r refund ought to be filed only in accordance with the Customs Act. Therefore, it did not include the payment made under some other enactment, which for some reason had erroneously been made to the Customs authorities. Even otherwise by referring to paragraph 137 of Mafatlal Industries case, one has to see whether the amount claimed is unconstitutional and outside the provisions of Section 11B of the Act. 21. In the case of Nataraj and Venkat Associates (supra), this was pertaining to service tax wherein petitioner company was dealing in architectural services and paid service tax for the construction of the building carried on at Sri Lanka and contended it would not have attracted levy of service tax. In other words, there was an application for refund of said tax and the question that arose therein was what is the relevant date for the commencement of the period of limitation for the purpose of Section 11B and was held that it would be the date of payment of duty. It was held in the paid case that amounts paid cannot be taken to be duty of excise, therefore bar of limitation under Section 11B cannot be applied because such limitation would come in the way of any person c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tending that Section 11B is not applicable as there was no duty cast on them to pay "service tax" and they have paid such amount under mistaken notion. Viewed from nay angle, we are of the opinion that the learned Single Judge was justified in setting aside that portion of the order which rejected the claim of refund and accordingly same is confirmed. 26. Accordingly, the appeals are dismissed. The concerned appellant authority is directed to refund the amounts as directed by the learned single judge within an outer limit of six weeks from the date of receipt of copy of this order." 9.3. The same view has been held by the Tribunal, Larger Bench in the case of Credible Engineering v. Commissioner of Customs and Central Excise, which has been upheld by the Hon'ble Telangana High Court[Central Excise Appeal No. 03 of 2023 vide judgement dated 15.04.2024 - Telangana High Court]. The relevant part of the said decision rendered by the Hon'ble Telangana High Court is reproduced below:- "3. This appeal filed under Section 35G of the Central Excise Act, 1944 (for short "the Act, 1944") takes exception to the order dated 05.09.2022 passed in Service Tax Appeal No.30781 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw 1997 (89) E.L.T.247 (S.C.) which has given rise to the aforesaid substantial question of law. The other side raised objection. 9. We have heard the matter at length. It is seen that the single question raised by Mr. Dominic Fernandes, learned counsel is no more res integra. In the manner proposed question is framed, it is not in dispute that service tax was not payable by the assessee. This question came up for consideration before the Delhi High Court in Hind Agro Industries Limited v. Commissioner of Customs 2. After considering the judgment of the Hon'ble Supreme Court in case of Mafatlal Industries Ltd. (supra 1), the Delhi High Court held that the judgment of Mafatlal Industries Ltd. (supra) nowhere talks of a situation where the refund of a tax paid under the relevant Act albeit erroneously was required to be made under the Excise Act or the Customs Act and under no other enactment. It was clearly held that judgment of Mafatlal Industries Ltd. (supra 1) is of no 2008 (221) ELT 336 (Del.) assistance in a case where tax is erroneously paid as a mistake of law. 10. The Tribunal has also taken note of the judgment of Karnataka High Court in Commr. of C.Ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "A. Whether in view of binding decisions of this Court the respondents are estopped from urging that compensation as claimed by the appellant is not payable by them? And therefore whether the Bombay High Court erred in allowing them to urge such a contention in the impugned judgment? B. Assuming for the sake of argument that there is no provision in the Income-tax Act, 1961 ("the Act") for grant of such compensation, this Court had upheld the view of the Gujarat & Madhya Pradesh High Courts that compensation should be granted (whether called interest or otherwise) and hence the impugned judgment was contrary to a decision of this Court and ought to be reversed? ... E. Whether the High Court ought to have held that sections 240 and 244 of the Act refer to 'refund of any amount', which phrase clearly includes any amount (including interest) due by the Income Tax department to the assessee, and hence the appellant was entitled to interest on the delay in the payment of amounts due from the Income-tax department ? .... 243. Interest on delayed refunds. (1) If the Income-tax Officer does not grant the refund (a) in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en and cannot in the circumstances be justified. ... At the initial stage of any proceedings under the Act any refund will depend on whether any tax has been paid by an assessee in excess of tax actually payable to him and it is for this reason that Section 237 of the Act is phrased in terms of tax paid in excess of amounts properly chargeable. It is, however, of importance to appreciate that section 240 of the Act, which provides for refund by the Revenue on appeal etc., deals with all subsequent stages of proceedings and therefore is phrased in terms of 'any amount' becoming due to an assessee. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....E of the Customs Act, 1962 fixing the rate of interest @ 6% per annum for the purposes of the said Section and, therefore, the same rate of interest is applicable. We do not find any substance in this submission of learned senior standing counsel for the respondents. Reason is that the said notification is dated 12.08.2014. The rate of interest on delayed refund of pre-deposit shall be governed by the law laid down by Hon'ble Supreme Court in ITC Limited (supra) as well as a coordinate Bench of this Court in Madura Coats Private Limited (supra) till statutory provision in the Act was enacted and a notification was issued thereunder providing for rate of interest on delayed refund of pre-deposit. With effect from the date on which the provision came in the statute, it shall hold the field and the rate of interest shall be governed by it. Since the period in question is prior to the notification providing for rate of interest on delayed refund of pre-deposit, issued under the Act, therefore, the case of the appellant shall be governed by the law laid down by the coordinate Bench of this Court in Madura Coats Private Limited (supra). 10. For all the reasons afore stated, ....