COMMISSIONER OF CUSTOMS Vs. TOLLIN RUBBERS (P) LTD

JUDGEMENT

(1.) THIS appeal is filed challenging the orders of the Customs, Excise & Service Tax Appellate Tribunal [2007 (211) E.L.T. 246 (Tri. - Bang.)] directing the department to grant interest on refund paid to the respondent. We have heard Sri Thomas Mathew Nellimoottil, Standing Counsel for the appellant and Adv. Sri P. Balakrishnan, appearing for the respondent. The case of the department is that the circular of the Board relied on by the Tribunal has no application because the amount involved is not pre -deposit made during pendency of appeal. So much so, the provision in the circular providing for interest for refund on pre -deposit does not apply in this case. We find force in this contention because in this case, what happened was during the pendency of appeal before the Tribunal, respondent had furnished bank guarantee for the duty amount. When the Tribunal dismissed the appeal, the duty demanded became payable and therefore the department recovered the amount by encashment of bank guarantee. However, the assessee filed appeal against Tribunal's order before the Hon'ble Supreme Court and the Supreme Court allowed the appeal on 11 -11 -2003 [ : 2004 (163) E.L.T. 289 (S.C.)]. Refund application was made by the assessee on 20 -2 -2004 and refund was in fact granted on 7 -4 -2004. The clear finding of the Tribunal is that there is not much delay in granting refund from the date of making application for refund, based on judgment in appeal passed by the Supreme Court. However, the Tribunal took the view that the duty refunded based on an appellate judgment is comparable to refund of pre -deposit covered by the circular referred to in the Tribunal's order and based on the circular, the Tribunal ordered interest on refund.

(2.) AFTER hearing both sides, we are unable to sustain the Tribunal's order because the amount became refundable to the respondent only based on the judgment of the Supreme Court dated 11 -11 -2003. Within three months, the respondent made application for refund and within the following two months, department granted refund. The claim for refund based on judgment of the Supreme Court is not comparable with refund on pre -deposit which is a deposit of duty or other demand paid for maintainability of appeal. When such amount paid or bank guarantee furnished is adjusted towards duty payable based on appellate order of the Tribunal, it ceases to be an amount of pre -deposit. So much so, the circular issued by the Board has no application. However, since Supreme Court judgment is binding judgment, it was the duty of the department to grant refund at least within three months from the date of judgment of the Supreme Court. To this extent, we uphold the claim of the respondent put forward before us by the counsel. We, therefore, hold that on general principles the assessee respondent is entitled to interest from 1st March, 2004 till the date of actual refund. Appeal is allowed in part modifying the Tribunal order as above.