The Delhi Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that interest on delayed refund of customs duty is payable at 6% per annum as per Section 27A of the Customs Act, and not at 12% as claimed by the importer.
The bench of Dr. Rachna Gupta (Judicial Member), dismissed two connected appeals challenging the Commissioner (Appeals)’ decision restricting the interest rate.
The case stemmed from investigations into alleged irregular imports of Chinese tyres under the brands “Infinity” and “Wanli.” During a search conducted in July 2014, customs officials found that the imported tyres did not bear Mandatory Retail Price (MRP) stickers, a requirement under Notification No. 21/2012 dated 17.03.2012 for exemption from Special Additional Duty (SAD). The goods were seized on grounds of non-compliance.
A separate consignment imported under Bill of Entry No. 6224101 dated 24.07.2014 was also detained for alleged undervaluation and non-affixation of MRP stickers. The importer secured provisional release of the seized goods by furnishing bonds, bank guarantees, and paying differential customs duties amounting to ₹3,83,645 and ₹3,94,331 respectively.
The adjudicating authority initially confirmed the duty demand in 2016, but this was overturned by CESTAT in January 2020, entitling the importer to a refund. Refunds were sanctioned in May and June 2021, but without interest, leading to the present appeals before the Tribunal seeking interest at 12% from the date of deposit till refund.
The appellant contended that the deposits were pre-deposits, attracting interest under Section 35FF of the Central Excise Act, 1994. In contrast, the Department argued that the sums represented customs duty payments made for provisional release of goods, making Section 27A of the Customs Act applicable.
The Tribunal sided with the Department, holding that the amounts paid were not pre-deposits, but customs duties linked to the provisional release of seized goods. Consequently, Section 35FF did not apply. The applicable law was Section 27A of the Customs Act, under which interest accrues after three months from the date of filing the refund claim. The rate of interest is 6%, as notified by the Central Government through Notification No. 75/2003-Customs (NT)dated 12.09.2003.
Vortex Rubber
Upholding the Commissioner (Appeals)’ order, CESTAT dismissed both appeals, affirming that the importer was rightly granted interest at 6% per annum on delayed refund from three months after filing the refund application until payment.
Case Details
Case Title: M/s Vortex Rubber Industries Pvt. Ltd. Versus Principal Commissioner of Customs (Preventive)
Case No.: Customs Appeal No. 50494 of 2024
Date: 28/10/2025
Counsel For Appellant: Anup Kumar Srivastava, Advocate
Counsel For Respondent: V.J. Saharan, Authorized Representative
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