ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 26.08.2025
CESTAT Kolkata Set Aside Interest Demand on Provisional Refunds
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a judgment that provides relief to M/s. Godrej Consumer Products Ltd. (GCPL) in a long-standing dispute over provisional refunds and interest liability. The case revolved around the refund of excise duty under area-based exemption notifications and the subsequent demand for interest on provisional refunds sanctioned to the company. This decision sets a precedent for similar cases and highlights the importance of adhering to statutory provisions and principles of natural justice.
Background of the Case
GCPL had set up manufacturing units in Assam and was availing 100% refund of duty paid under Notification No. 20/2007-CE. However, an amendment via Notification No. 20/2008-CE restricted the refund to 34% of the total duty paid, with an option for manufacturers to apply for special value addition rates. GCPL challenged the amended notification before the Gauhati High Court, which initially struck it down. The matter eventually reached the Supreme Court, which upheld the validity of the amended notification.
During the litigation, GCPL was granted provisional refunds amounting to Rs. 24,00,07,627/- based on interim orders from the Gauhati High Court and Supreme Court. After the Supreme Court’s final decision, the Department adjusted these refunds against the amounts determined under special value addition rates, leaving a net excess refund of Rs. 50,96,571/-.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: CESTAT Kolkata
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