TMI Blog2019 (10) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the petitioner is entitled for interest on the amount refunded? - HELD THAT:- Liability to refund begins when it actually due and not when it is actually determined. At this juncture, it is worth to note that while adjudicating the duty liability, the Adjudicating Authority also imposes interest and penalty on such duty liability. It is not that duty alone is collected from the importer from the date of adjudication and on the other hand, such liability to pay duty is fastened on such importer from the date when it becomes due. Therefore, the Revenue collects the interest on such belated payment of duty and also penalty for not paying the same at the appropriate time. The same analogy is to be applied in the case of refund as well, while considering the payment of interest. Section 27A of the Customs Act was carefully coined for payment of such interest from the expiry of three months of the date of the application and not from the date of the order. The order of the respondent, impugned in this writ petition, cannot be sustained - Petition allowed - the respondent is directed to pay interest with permissible percentage under law, from the date of expiry of three months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act was not taken into consideration by the Adjudicating Authority and by the First Appellate Authority as well. The petitioner approached the CESTAT against those rejection orders. The CESTAT by its order dated 19.02.2018 remanded the matter to the Original Authority, directing him to verify the reversal of CENVAT. Pursuant to such direction, the respondent passed refund order dated 02.07.2018, sanctioning the refund of ₹ 2,38,24,418/-. The petitioner was not granted any interest for the delay in sanctioning the credit. The petitioner filed an application dated 20.08.2018, claiming interest on the refund granted. The said application was rejected by passing the impugned order on the ground that CVD, which was collected, is only a deposit and not a duty . 3. A counter affidavit is filed by the respondent, wherein it is stated as follows: The amount collected from the petitioner was only deposit and not duty. Therefore, the same was not eligible for interest under Section 27A of the Customs Act, 1962. Further, the deposit was refunded under Order in Original dated 02.07.2018, pursuant to the CESTAT order dated 19.02.2018. Hence, there is no del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled in 2018 for interest and on the other hand, the application filed in 2018 is only a reminder of the application filed in 2012. c) In support of the above contention, the learned counsel for the petitioner relied on the decision of the Hon'ble Supreme Court reported in M/s.Ranbaxy Laboratories Ltd. vs. Union of India, 2011(273) ELT 3 (SC). 5. Per contra, learned Standing Counsel for the Revenue contended as follows: The writ petition is not maintainable, since a statutory appellate remedy is available to the petitioner. The refund application was rejected by the Original and Appellate Authority. The CESTAT, however, by order dated 19.02.2018, remanded the matter to the Original Authority, by directing him to verify the reversal of CENVAT. Accordingly, the Original Authority, without loss of further time, considered and passed refund order dated 02.07.2018, sanctioning the refund. Therefore, there is no delay in sanctioning the refund and consequently, the petitioner is not entitled for interest from the date of his application. Moreover, even according to the petitioner, the amount collected was only deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the amount collected from the petitioner is a duty or deposit . 10. Before answering the above question, it is better to understand the difference between term duty and deposit . Certainly, both are not conveying the same meaning and intended purpose. While the deposit , either offered by the importer/assessee on their own or in compliance of statutory obligation, pending disposal of a proceedings, is an act as an interim measure, the duty is the statutory liability collected as revenue to the Revenue on determination of the liability of the importer. In other words, while the deposit is made to safegaurd the interest of the Revenue pending adjudication/determination of the liability of the importer to pay the duty, the duty is paid and collected by discharging the statutory obligation of such payment. No doubt, both 'duty' and 'deposit' are in the hands of the Revenue. At the same time, it is to be noted that right to credit or forfeit such deposit would arise only after determination of the liability to pay the 'duty'. On the other hand, the right over the duty so paid is instant on the revenue and not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as for home consumption. The TRU vide Circular No.B-1/2/2011-TRU dated 25.03.2011 had clarified that levy of CVD would not apply to such imports which are temporary in nature. Hence, at least on that count, the department should have desisted from charging CVD. ...7.In view of the above discussions and facts stated therein, I set aside the order of assessment and allow the appeal with consequential relief as per law. The appellant may apply for refund in accordance with the procedure laid down for the same. 13.Perusal of the above order of the Appellate Authority would show that the claim of the Revenue that the amount collected was only a deposit and not duty , is factually incorrect and thus liable to be rejected. 14. The next question to be decided is as to whether the petitioner is entitled for interest on the amount refunded. 15. Section 27A of the Customs Act, 1962 deals with interest on delayed refunds. It reads as follows: 27-A. Interest on delayed refunds If any duty ordered to be refunded under sub-section (2) of section 27 to an applicant is not refunded within three mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same dates back from the date of its collection. In other words, an amount collected by the Revenue without authority of law or by erroneous application of provision of law, if retained by the Revenue all along without having any legal sanction to retain the same, such collection and retention would amount to unjust enrichment and thus liability to return or refund to the person from whom it was collected, commences from the day it was demanded and collected. Therefore, when a liability to refund is determined, such liability dates back and commences not from the date of the order for refund but from the date of such collection. Liability to refund begins when it actually due and not when it is actually determined. At this juncture, it is worth to note that while adjudicating the duty liability, the Adjudicating Authority also imposes interest and penalty on such duty liability. It is not that duty alone is collected from the importer from the date of adjudication and on the other hand, such liability to pay duty is fastened on such importer from the date when it becomes due. Therefore, the Revenue collects the interest on such belated payment of duty and also penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T on 19.02.2018. Thereafter, the Original Authority as a consequence of the order passed by CESTAT, made denovo adjudication and ordered refund of ₹ 2,38,24,418/- to the petitioner, by order dated 02.07.2018. Even in the said order, it is evident that the amount collected from the petitioner was referred as a 'duty' and not 'deposit', as claimed before this Court. Therefore, it is evident that the amount of duty collected from the petitioner through the Bill of Entry dated 04.07.2011 is a wrong and invalid collection and thus not sustainable in law. Therefore, the Revenue has rightly refunded the said sum to the petitioner by order dated 02.07.2018. 19. It is seen that an amount of ₹ 2,38,24,418/- was collected as 'duty' from the petitioner in respect of Bill of Entry No.000694 dated 04.07.2011 by passing an order of assessment. There is no dispute to the fact that the said amount was refunded by passing an order dated 02.07.2018 as stated supra. Thereafter, the petitioner filed an application for grant of interest on delayed refund, through his application dated 20.08.2018. According to the Revenue, since the refund was made immed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this Sub-section as amended by the Act and the same shall be dealt with in accordance with the provisions of Sub-section (2) as substituted by that Act: Provided further that the limitation of one year shall not apply where any duty has been paid under protest. (2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of duty of excise and interest, if any, paid on such duty of excise as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of three months from the date of receipt of such application till the date of refund of such duty: Provided that where any duty ordered to be refunded under Sub-section (2) of section 11B in respect of an application under Sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty. Explanation : Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under Sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the Court shall be deemed to be an order passed under the said Sub-section (2) for the purposes of this section. 9. It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. 20. Perusal of the facts and circumstances of the above case before the Apex Court and the present case would show that they are identical in nature and only difference is that the interest claim before the Apex Court arises under the Central Excise Act whereas in the present case, it arises under the Customs Act. I have already pointed out that Section 11BB of the Central Excise Act and Section 27A of the Customs Act are pari materia and therefore, I find that the above decision is squarely applicable to the present facts and circumstances of the case, which the Adjudicating Authority has failed to apply and follow. 21. Therefore, it is evident that the liability to pay interest would commence from the date of expiry of three months from the date of application for refund and not on the expiry of the said period from the date on which the order of refund was made. In this case, admittedly, the refund application was made by the petitioner on 20.09.2012 ..... 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