Legal principle

Where duty is paid under protest and a refund application is filed contemporaneously with such payment, interest runs from the date immediately following three months from that application, because a dispute purely over the legality of the levy leaves no 'ascertained sum' or quantification gap capable of postponing the interest clock.

Court decision

The Tribunal allowed all four appeals, set aside the Orders-in-Appeal, held the appellant entitled to interest under Section 11BB computed from the electronic ACES claims filed contemporaneously with each protest payment (i.e., from the day after three months from each such claim until 05.05.2015), and remitted the matter to the refund sanctioning authority for quantification within ninety days.

Facts

M/s V.V.D and Sons Pvt. Ltd., a Tuticorin-based coconut oil manufacturer, paid central excise duty under protest on small packs (up to 200 ml) pursuant to a CBEC Section 37B classification circular, while challenging that circular before the Madras High Court, and filed refund claims electronically through ACES contemporaneously with each protest payment from 2012 onward. The High Court quashed the circular on 29.04.2014, after which the appellant filed Form 'R' claims (received 06.02.2015) and the Assistant Commissioner sanctioned the refunds on 05.05.2015 under Section 11B of the Central Excise Act. More than four years later, by letter dated 17.06.2019, the appellant claimed interest on the amounts refunded; the adjudicating authority and the Commissioner (Appeals) rejected the interest claims, holding the relevant date was the High Court judgment and the refund was sanctioned within three months of the claim, and that the belated plea was barred by limitation and laches.

Key provisions

• Section 27A, Customs Act, 1962 — Interest of delay refunds
• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 2(2), Customs Act, 1962 — Definitions