CESTAT Mumbai Upholds Interest On Delayed Refund Of ₹21.17 Crore Extra Duty Deposit To JSW Steel

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Customs cannot deny interest on the delayed refund of ₹21.17 crore paid as Extra Duty Deposit merely because Bills of Entry remained pending finalisation on unrelated issues.

The tribunal observed that “under no circumstances can the respondents be made liable for the delay on the part of the Department, which fact has also been taken cognizance in the impugned order by the learned Commissioner (Appeals)."

A Bench of Judicial Member S.K. Mohanty and Technical Member M.M. Parthiban delivered the ruling while dismissing the Revenue's appeal against JSW Steel Limited.

The dispute arose from JSW Steel's imports of different grades of coal from its related overseas supplier, JSW International Tradecorp Pte. Ltd., Singapore, during 2014–15 and 2015–16. Since the transactions involved a related party, Customs provisionally assessed the consignments pending examination by the Special Valuation Branch (SVB). During this process, JSW deposited 1% of the assessable value as Extra Duty Deposit (EDD).

By an order dated September 9, 2015, the SVB concluded that “the relationship has no influence on the pricing between the respondents-importer and the related party supplier.” It also held that “the declared invoice value for the imported goods as submitted in the B/Es by the respondents shall be accepted.”

Following this, JSW Steel filed a refund application on March 23, 2016, seeking a refund of ₹ 21.17 crore deposited as EDD. Customs did not process the claim, stating that the Bills of Entry had not yet been finally assessed.

JSW argued that the refund claim related specifically to the EDD deposited during the pendency of the SVB investigation. It said the refund was independent of finalisation of assessments concerning testing reports, demurrage, dispatch certificates, or quantity verification.

Customs later finalised the Bills of Entry and sanctioned a refund of ₹21.17 crore on July 27, 2017. However, it denied interest, claiming the refund application became complete only when refiled in the prescribed format on May 5, 2017.

The Commissioner (Appeals) rejected that view. It directed payment of interest from three months after receipt of the original refund application to the date of the refund.

Before the tribunal, the Revenue argued that no refund claim could be entertained before finalisation of provisional assessments. It also contended that no interest was payable because the refund was sanctioned within three months of the refiled application.

Rejecting the contention, the tribunal found that JSW's original refund application had been filed with all relevant documents. These included the SVB order, Chartered Accountant certificate, EDD challans, and Bills of Entry.

The tribunal also noted departmental instructions requiring expeditious handling of such claims. It held that the importer could not be prejudiced by departmental delay in finalising assessments.

Accordingly, the tribunal dismissed the Revenue's appeal. It upheld the direction to pay interest on the delayed refund to JSW Steel.

For Petitioner: Deepak Sharma, Authorized Representative

For Respondent: Vipin Jain along with Shri Ramnath Prabhu, Ananya Maitin