The Supreme Court of India on Monday issued notice in a civil appeal filed by Vedanta Limited, challenging a ruling of the Calcutta High Court that denied the company interest on a delayed refund of export duty paid on iron ore exports.
A Bench comprising Justice Manoj Misra and Justice Manmohan condoned the delay in filing the appeal and directed issuance of notice to the respondents, returnable within six weeks. The brief order stated: “Delay condoned. Issue notice, returnable in six weeks.”
Background of the Dispute
Vedanta’s appeal arises from a Calcutta High Court judgment dated September 10, 2025, delivered in an appeal filed by the Customs Department against an earlier order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
The Tribunal had directed the Customs authorities to pay interest at the rate of 12 percent per annum on the refund of excess export duty paid by Vedanta on iron ore exports. The interest was directed to be calculated from January 2011, the period from which the Tribunal held the excess duty to have been retained unlawfully.
However, the High Court overturned the Tribunal’s order, holding that the grant of interest was contrary to the statutory framework under the Customs Act, 1962.
High Court’s Reasoning
The Calcutta High Court held that refunds and interest under customs law are governed strictly by Sections 27 and 27A of the Customs Act. According to the Court, interest becomes payable only if a sanctioned refund is not released within three months from the date of receipt of a valid refund application.
The Court noted that Vedanta filed its refund application on August 5, 2022. The refund was sanctioned through an Order-in-Original dated September 5, 2023, and the amount was released on September 6, 2023.
Given these dates, the High Court concluded that the refund was issued within the statutory time limit, and therefore, no delay was established that would attract interest under Section 27A.
Rejection of Interest From 2011
The High Court strongly disagreed with the Tribunal’s direction to award interest from January 11, 2011. It observed that the refund amount “crystallized for the first time only after the Order-in-Original dated 05.09.2023,” and therefore, granting interest from a date more than a decade earlier was legally unsustainable.
The Court held that statutory interest cannot precede the existence of a quantified and sanctioned refund claim under the Customs Act.
Export Duty Not a “Deposit”
The High Court also rejected Vedanta’s argument that the excess export duty paid should be treated as a “deposit” rather than duty. It held that the export duty was paid voluntarily on the basis of self-assessment, and not under protest or provisional assessment.
The Court further noted that it was “too late in the day” for the assessee to contend that the assessment was provisional, especially when no such claim had been made at the relevant time.
Supreme Court to Examine the Issue
With the Supreme Court now issuing notice, the matter will be examined at the apex level, particularly on the question of whether interest can be claimed for periods prior to the filing of a statutory refund application, and whether excess duty paid under self-assessment can, in certain circumstances, be treated as a refundable deposit.
The case is expected to have significant implications for customs refund jurisprudence, especially in disputes involving long-pending claims and the scope of statutory interest under the Customs Act.
Case Details
Case Title: M/S VEDANTA LIMITEd Versus Customs Commissioner
Case No.: CIVIL APPEAL DIARY NO(S). 64232/2025
Date: 27-01-2026
