Order date – 02 December 2022

Facts –

• The Appellant, Matta Paints and Hardwarestore, on a search conducted found goods worth Rs.1,01,21,609/- along with an amount of Rs. 12,53,500/- Indian currency (INR) were seized by the Anti-Evasion team by seizure memo dated 05.03.2012. The sum so seized was got fixed in a deposit with Syndicate Bank on 05.03.2012 itself.
• A show cause notice issued to confiscation of currency along with the goods seized. The proposal was set aside and refund of amount of Indian currency worth Rs.12,53,500/- was sanctioned however, interest only from the date of application for refund till the sanction thereof has been awarded on the ground of delay due to sanctioning of refund beyond the period of three months in terms of section 11B/11BB of Central Excise Act, 1944.
• Being aggrieve the appellant had filed an appeal

Issue –

• Whether the appellant is eligible to interest on refund from the date of deposit of principal amount or at least from the date the said amount was fixed in a bank deposit by the Department, i.e. from 05.03.2012?

Order –

• The Tribunal relied on the decision of the Hon’ble Apex Court in the case of Commissioner of Customs (Import), Raigad vs M/s. Finacord Chemicals (P) Ltd. while discussing the liability of the department to pay the interest has referred to Departments’ own circular dated 2.1.2002 wherein the Board clarified that the matters of refund other than the amount of duty would not be covered under the provisions of section 11B of Customs Act or section 35FF of Central Excise Act. It was held by the Hon’ble Apex Court that in such cases of refund even the concept of unjust enrichment is not applicable.
• Another circular of department bearing No. 802/35/2004 CX dated 8.12.2004 was also being considered by the Apex Court in its above mentioned judgment. In that circular the Board emphasised that the amounts other than the amount of duty if deposited it should be refunded immediately as non-returning of deposits attract interest that has been granted by the Courts in number of cases.
• The Tribunal also relied on the decision of the Hon’ble High Court of Allahabad in the case of RHL Profiles Ltd. vs Commissioner of Customs, Ex and Service Tax, Kanpur reported as [2017 (352) ELT 349 (All)] wherein it has been held that once the confiscation has been set aside, confiscation of seized currency has been set aside and the fact is that the Department has earned interest during the period the currency was retained by it, it was held that payment of interest could not be denied merely for the reason that there is no express statutory provision.
• With these observations, the order under challenge is hereby set aside and appellant is held entitled for refund of interest on the principle amount at the rate of 12% from the date of its seizure. Consequent thereto the appeal stands allowed.