Differential Duty Paid For Provisional Release Not Pre-Deposit; Refund Interest Payable Only At 6% U/S 27A Customs Act: CESTAT

Dr. Rachna Gupta (Judicial Member) opined that all those goods were ordered to be released as per the provisions of the Customs Act, 1962, at the assessee's own request for provisional release of the goods. This apparent and admitted fact is sufficient to hold that the amounts in question cannot be considered as an amount deposited under protest. Hence, Section 35FF is held to not be applicable to the given set of circumstances.

In this case, the assessee/appellant is engaged in imports of Chinese tyres of “Infinity” and “Wanli” brands.

During a search, the revenue found that goods lying in the premises of the assessee were not bearing MRP (Mandatory Retail Price) stickers, which was otherwise a mandatory requirement for availing the benefit of exemption from SAD (Special Additional Duty) as per Notification No. 21/2012 dated 17.03.2012. The goods were accordingly seized.

Meanwhile, the assessee also filed Bill of Entry No. 6224101 dated 24.07.2014 for importing truck tyres and flaps. However, the consignment was put on hold, alleging improper valuation and not affixing MRP stickers. Those goods were also seized under Section 110 of the Customs Act and were opined liable for confiscation.

However, on the request of the assessee for provisional release, the goods were provisionally released on furnishing of bonds, bank guarantee and payment of 100% differential duty.

On the goods detained during the search, the differential duty of Rs. 3,83,645/- was assessed, and for the goods covered under Bill of Entry No. 6224101 differential duty of Rs. 3,94,331/- was assessed.

The original adjudicating authority rejected the declared value, confirmed the duty demand and ordered for appropriation of the amount of differential duty deposited by the assessee at the time of provisional release of the goods.

The assessee submitted that the amounts in question were in the nature of a pre-deposit and were not in the nature of a duty. Hence provision of Section 27A of the Customs Act, as invoked by the Commissioner (Appeals), is not applicable.

It was submitted that on the said amount, the interest is payable in terms of Section 35FF of the Central Excise Act, 1994. Interest is accordingly prayed @ 12% from the date of deposit till the date of payment.

The Tribunal opined that the refund application was filed on 31.12.2020, whereas the orders sanctioning the refund are dated 30.06.2021; hence, the assessee is entitled to interest for the period after the expiry of three months from the date of receipt of such application till the date of refund of such duty.

As per Section 27A of the Customs Act itself, the rate of interest has to be such as fixed by the Central Government by a notification in the official gazette. It has been brought to notice that the Notification No. 67/2003 restricts the rate of interest at 6% in case of delayed refund, noted the Tribunal.

The bench held that the interest calculated @ of 6% from the date immediately after the expiry of three months till the disbursement thereof has rightly been sanctioned by the Commissioner (Appeals).

In view of the above, the Tribunal dismissed the appeal.

Case Title: M/s Vortex Rubber Industries Pvt. Ltd. v. Principal Commissioner of Customs (Preventive), New Delhi

Case Number: Customs Appeal No. 50494 of 2024

Counsel for Appellant/ Assessee: Shri Anup Kumar Srivastava

Counsel for Respondent/ Department: Shri V.J. Saharan

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