2026-VIL-1815-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - Entitlement to interest on refund of amount deposited during investigation, from the date of deposit till realisation - Appellant cleared the imported goods on payment of duty and deposited an amount during investigation, after which the demand confirmed by the adjudicating authority was set aside by the Commissioner (Appeals) and the appeal of the Department was dismissed by the Tribunal in remand proceedings - Appellant thereafter claimed refund of the deposit in terms of the Board Circular, and the refund was sanctioned within three months of filing the claim, but interest was disallowed on the ground that it is payable only after three months from the date of filing of the refund claim - Appellant relied on the decision of the Hon'ble High Court of Orissa allowing interest from the date of deposit till realisation - Whether the Appellant is entitled to interest on the refunded amount from the date of deposit till its realisation - HELD - The Hon'ble High Court of Orissa held that where the refund results from a finding that the amount ought not to have been collected in the first place, interest on the refunded amount should run from the date on which the claimant parted with the money and was restrained from using it. In the present case the customs duty was admittedly not payable by the Appellant in the first place, as the demand stood set aside - Following the decision of the Hon'ble High Court, the contention of Revenue that interest is payable only after three months from the date of filing of the refund claim is not accepted - The Appellant is entitled to interest from the date of payment till its realisation and both the appeals are disposed of accordingly
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