No Interest on delayed refunds of deposits - Customs Clarification

By Vijay Kumar

THE JN Customs has clarified that no interest is payable in respect of refund of deposits (for example security deposits, deposits on project import, etc.).

The Customs Commissioner states that Interest on delayed refunds of duty/ drawback is paid in terms of provisions under Customs Act, 1962 and relevant notifications issued by the Competent Authority from time to time; and there seems to exist a lack of clarity among certain stakeholders that interest is also payable on deposits (for example security deposits, deposits on project import, etc).

He also refers to CBEC Circular No. 59/95 issued vide F.No. 438/7/95 CUS IV, which in para 6 states,

"The finalisation of refund claims are to be closely monitored and it may be ensured that these are decided without fail within the period provided. No interest liability should normally lie on the Government. It is further desired that all refund claims in future be settled at the level of Assistant commissioner only (and not by Superintendent/ Appraiser). No interest is payable in respect of deposits (for example deposits for project import, etc.). Pre audit system as well as issue of cheques should be ensured at utmost speed."

Somehow within the same Ministry, the CBDT is not scared of paying interest on the money held by them, but interest is a bad word in CBEC. Only yesterday, a Chief Commissioner told me that in his zone the time limit (prescribed by him) for refund was 15 days - for one, the assessees are happy and he doesn't need to pay interest. Many officers routinely delay refunds and when it comes to paying interest, avoid it at any cost.

JN Custom House Public Notice No. 144/2016., Dated: October 31 2016