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CA Final · Indirect Tax Laws · Refund

Tata Steelworks Ltd (illustrative) appealed against a customs order and, as required under section 129E, deposited Rs 40,00,000 pending appeal. The appellate authority allowed the appeal, so the deposit has to be refunded. Which statement correctly describes the interest position under section 129EE for a deposit made after 6 August 2014?

Interest is payable at the rate notified by the Central Government, which can be no less than 5% and no more than 36% per annum. It runs from the date the deposit was paid until the date it is refunded, not merely from the appellate order.

  1. AInterest is payable at a rate fixed by the Central Government by notification, not below 5% and not exceeding 36% per annum, from the date of payment of the deposit to the date of refundCorrect
  2. BInterest is payable only from the date of the appellate order to the date of refund
  3. CInterest is payable at a fixed 12% per annum from the date of the refund application
  4. DNo interest is payable on pre-deposits refunded after appeal

Explanation

Section 129EE provides that where an amount deposited under section 129E is refundable consequent upon the appellate authority's order, interest is paid at a rate between 5% and 36% per annum as fixed by the Central Government by notification. It runs from the date of payment of the deposit until the date of refund. Option B starts from the wrong date and option D denies interest altogether.

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