Indirect Tax Laws and Practice · Refund

Interest on Delayed Refund of Pre-deposit under Section 129EE

Updated 11 October 2026 · Fact-checked

Section 129EE of the Customs Act, 1962 gives an appellant interest when an amount deposited under section 129E for an appeal must be refunded after the appellate authority's order. The rate is fixed by the Central Government by notification, between 5% and 36% a year. Interest runs from the date of payment to the date of refund.

Understand Interest on Delayed Refund under Section 129EE

To file an appeal under the Customs Act, you must first deposit a part of the disputed duty or penalty. This is the pre-deposit under section 129E. The Commissioner (Appeals) or the Tribunal will not entertain your appeal without it.

If you win, the department must give the deposit back. Your money has been with the government for the whole period of the dispute. Section 129EE compensates you for this by paying interest on the refunded amount.

The section applies where the deposit is required to be refunded consequent upon the order of the appellate authority. The interest is paid on the amount deposited, not on the whole duty demanded.

The period is the key point. Interest runs from the date of payment of the deposit till the date of refund. It does not start only after a waiting period of three months, as in section 27A for ordinary refunds. So interest is payable for the full time the deposit was held, once refund is due under the appellate order.

The rate is not written in the section. The section says the rate is not below 5% and not exceeding 36% per annum, as fixed by the Central Government by notification in the Official Gazette. In the exam, use the rate the question gives you.

Key rules to remember

Trigger for interest: Deposit under section 129E + refund required consequent upon the order of the appellate authority ⇒ interest payable; Interest is payable to the appellant on the deposited amount.
Rate range: 5% ≤ rate ≤ 36% per annum, as fixed by the Central Government by notification; Use the rate given in the question. The section itself does not fix one rate.
Period of interest: From the date of payment of the deposit till the date of refund; No three-month waiting period, unlike section 27A.
Interest computation: Interest = Deposit × Rate ÷ 100 × (Number of days ÷ 365); Month-based working is also acceptable if the question gives months. Check how the question states the period.
Pre-deposit percentages under section 129E: 7.5% of the duty (or of the penalty, where only penalty is in dispute) for an appeal to the Commissioner (Appeals) under section 128(1), against an order of an officer lower in rank than the Principal Commissioner or Commissioner; 7.5% for a Tribunal appeal against a decision or order under section 129A(1)(a); 10% for a Tribunal appeal against a decision or order under section 129A(1)(b); maximum deposit ₹10 crore; Needed to compute the deposit on which interest is paid. First identify which appeal route and which order is involved.

How to solve Interest on Delayed Refund under Section 129EE questions

Use this method for any question on interest on a refunded pre-deposit.

1Identify the appeal stage and the order appealed against. This decides the deposit percentage under section 129E: 7.5% or 10%.
2Compute the pre-deposit. Apply the percentage to the duty (where duty or duty and penalty are in dispute) or to the penalty (where only penalty is in dispute). Cap it at ₹10 crore.
3Confirm that the appellate authority has ordered the refund of the deposit, in the appellant's favour.
4Find the start date: the date the deposit was paid.
5Find the end date: the date the refund was actually made.
6Count the period between the two dates, in days or months as the question allows.
7Apply the notified rate given in the question to the deposit, for the period counted.
8State the total refund (deposit plus interest) and mention section 129EE.

Quickest way: Deposit, rate, period in three lines

When to use it: Use in MCQs and short numerical questions where the deposit and the rate are already given.

Write the deposit amount. If not given, compute 7.5% or 10% of the duty or penalty, capped at ₹10 crore.
Interest = Deposit × Rate × Time. Time runs from the date of payment to the date of refund, with no waiting period.
Add interest to the deposit if the question asks for the total amount received.

Common mistakes in Interest on Delayed Refund under Section 129EE

Applying the three-month waiting period of section 27A to a pre-deposit refund.
Both sections deal with interest on delayed refund, so students mix them up.
Fix: Section 27A applies to refund of duty under section 27 and starts after three months from the application. Section 129EE runs from the date of payment of the deposit.
Computing interest on the full duty demanded.
Students forget that interest is on the amount deposited under section 129E.
Fix: First compute the deposit (7.5% or 10%, subject to the ₹10 crore cap) and then apply the rate to that amount.
Using a fixed rate such as 6% or 12% without being told.
Students remember a rate from practice, but the section only gives a range.
Fix: State that the rate is 5% to 36% per annum as notified, and use the rate in the question.
Confusing the rate range with that of section 28AA or section 27A.
The ranges look similar: 28AA is 10% to 36%, 27A is 5% to 30%, and 129EE is 5% to 36%.
Fix: Link each range to its section: 28AA for interest on duty payable by the importer, 27A for refund of duty, 129EE for refund of pre-deposit.
Using the wrong deposit percentage or ignoring the cap.
Students recall only 7.5% and forget the 10% case and the ₹10 crore limit.
Fix: Check which clause of section 129E applies, and cap the deposit at ₹10 crore.

Worked examples

Example 1

Sharma Exports Pvt Ltd deposited ₹3,75,000 under section 129E to file an appeal before the Commissioner (Appeals). The appeal was allowed, and the deposit was refunded exactly one year (365 days) after the date of payment. The notified rate is 6% per annum. Compute the interest under section 129EE.

Show the solution

The deposit of ₹3,75,000 was made under section 129E and is refundable consequent upon the appellate order, so section 129EE applies.
Interest runs from the date of payment of the deposit till the date of refund, which is 365 days here.
Interest = ₹3,75,000 × 6% × 365 ÷ 365 = ₹3,75,000 × 0.06 = ₹22,500.
Total received = ₹3,75,000 + ₹22,500 = ₹3,97,500.

Answer: Interest payable is ₹22,500. The appellant receives ₹3,97,500 in total.

Example 2

Mehta Traders were assessed to customs duty of ₹40,00,000 and no penalty. They appealed to the Commissioner (Appeals) against an order passed by a Deputy Commissioner, after depositing the amount required under section 129E. The appeal succeeded and the deposit was refunded after 6 months from the date of payment. The notified rate is 8% per annum. Compute the deposit and the interest.

Show the solution

The order is by an officer lower in rank than the Commissioner, so the deposit is 7.5% of the duty under section 129E.
Deposit = ₹40,00,000 × 7.5% = ₹3,00,000. This is below the ₹10 crore cap.
Interest runs from the date of payment to the date of refund, which is 6 months.
Interest = ₹3,00,000 × 8% × 6 ÷ 12 = ₹24,000 × 0.5 = ₹12,000.
Total refund = ₹3,00,000 + ₹12,000 = ₹3,12,000.

Answer: Deposit is ₹3,00,000. Interest under section 129EE is ₹12,000, so the total refund is ₹3,12,000.

Exam tips

Write the section number 129EE and the phrase 'from the date of payment till the date of refund'. These carry the marks in theory answers.
In MCQs, watch for options that add a three-month waiting period. That belongs to section 27A, not 129EE.
In numericals, show the deposit computation first, since interest is on the deposit and not on the duty demanded.
Remember the rate is notified by the Central Government within 5% to 36%. Use the rate given in the question.
In case scenarios, check that the refund arises from the appellate authority's order before you apply the section.

Practice questions from Refund

Interest on Delayed Refund under Section 129EE in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA FinalInterest on Delayed Refund (Sections 27A and 129EE)

Interest on Delayed Refund under Section 129EE: frequently asked questions

What is the rate of interest under section 129EE of the Customs Act?

The section says interest is at a rate not below 5% and not exceeding 36% per annum, as fixed by the Central Government by notification in the Official Gazette. The exact rate comes from the notification. In exam questions, the rate is usually stated.

From when does interest run on a refund of pre-deposit?

Interest runs on the amount from the date of payment of the deposit till the date of refund. There is no initial period of three months before interest starts.

Is interest payable on deposits made before the Finance (No. 2) Act, 2014?

Interest on deposits made under section 129E before the commencement of the Finance (No. 2) Act, 2014 is governed by section 129EE as it stood before that Act, not by the present text. The present section applies to later deposits. Do not apply the present rate range and period to the earlier deposits.

How is section 129EE different from section 27A?

Section 27A gives interest on delayed refund of duty ordered under section 27, after three months from the application. Section 129EE gives interest on the refund of a pre-deposit made for an appeal, from the date of payment to the date of refund.