The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Delhi has held that interest paid on delayed customs duty is not eligible for refund under GST’s transitional provisions.
The bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member), ruled that the transitional provisions under Section 142 of the CGST Act permit refunds only for amounts accrued as a right under the existing law. Interest paid due to delayed fulfillment of EPCG obligations is a statutory liability and does not constitute a refundable amount. While duty components could have been eligible for credit or cash refund under transitional provisions, interest was never admissible for such treatment.
The dispute arose when a company imported capital goods duty-free under the Export Promotion Capital Goods (EPCG) scheme in 2011 but failed to fulfill the export obligations within the stipulated time. As per the Foreign Trade Policy, it later paid customs duties amounting to ₹42.99 lakh along with ₹51.59 lakh as interest in January 2019—over eight years after the imports.
Following the payment, the company filed a refund claim for the interest amount under Section 142 of the Central Goods and Services Tax (CGST) Act, 2017 read with Section 11B of the erstwhile Central Excise Act, 1944. The claim was rejected by the Assistant Commissioner and upheld in appeal. The matter then reached CESTAT.
Since the appeal’s filing in May 2021, the appellant sought more than 15 adjournments. Despite a prior warning that no further adjournments would be granted, the appellant again requested adjournment on the hearing date. The Tribunal refused and proceeded with the matter, citing the Supreme Court’s ruling in Balaji Re-Rolling Mills vs. CCE (2014), which permits adjudication in the absence of a party after sufficient opportunities.
Rakesh Agarwal, the Authorised Representative of the department argued that while customs duties such as CVD and SAD could have been availed as CENVAT credit if paid before GST implementation, the same was not possible after July 2017. Moreover, interest on delayed payments was never eligible for credit under the erstwhile law.
Dismissing the appeal, the Tribunal confirmed that there was no infirmity in the order rejecting the refund claim. The ruling clarifies that interest on delayed payment of duties, even when paid post-GST implementation, is not refundable under transitional provisions.
Case Details
Case Title: M/S Rajshree Global Pvt Ltd Versus Commissioner(Appeals), CGST – Jaipur
Case No.: Excise Appeal No. 50821 Of 2021
Date: 07/08/2025
Counsel For Appellant: None
Counsel For Respondent: Rakesh Agarwal, Authorised Representative
Read More: Seizure of Cash During Search Is Illegal: Supreme Court Dismisses GST Dept. Review Petition
