2016 (1) TMI 1193 - AT - Customs

Interest on refund - application of refund filed on 27th July 2009, but was incomplete - Held that - the claim of revenue that the documentation is incomplete but, it is seen that no such deficiency was brought to the notice of the applicant. In these circumstances, the claim of incomplete application does not find any support. The application, therefore, must be presumed to be complete - Further, from perusal of section 27A of the Customs Act, that where a duty is ordered to be refunded and the said amount is not refunded within three months from the date of receipt of application, the interest liability shall crystalise. The appellant is entitled to interest as laid down in Section 27A in accordance with the rates fixed by the Central Government notification and the same is allowed - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Denial of interest on refund sanctioned to the applicant.

Analysis:
The appeal was filed against the denial of interest on a refund sanctioned to the appellant. The appellant had filed a bill of entry for clearance of polyester chips, which was assessed to a higher duty. The first appellate authority set aside the order of assessment, leading to the filing of a refund claim. The refund was sanctioned, but interest on delayed payment was not allowed. The contention was that interest liability is contingent upon non-sanction of refund within three months from the date of the application. The appellant relied on previous tribunal decisions and circulars mandating interest on delayed refunds. The authorized representative reiterated the findings of the original authority.

The refund claim arose due to the successful appeal of the importer on the valuation issue. The Revenue contended that the refund claim was incomplete as original documents were not submitted with the application. The explanation to Rule 2 of the Customs Refund Application Regulation was emphasized, stating that a complete application triggers the receipt date for interest calculation. The appellant argued that if the application was incomplete, it should have been returned within ten days for rectification. However, as no deficiency notice was issued, the claim of an incomplete application was deemed unsupported. Section 27A of the Customs Act was cited, indicating that failure to refund within three months of the application triggers interest liability. Therefore, the appellant was entitled to interest as per Section 27A rates, which was allowed by the Tribunal.

In conclusion, the appeal was disposed of in favor of the appellant, granting them the interest on the refund as per Section 27A of the Customs Act.