2013 (4) TMI 256 - AT - Customs

Interest on refund - at the time of clearance benefit of exemption notification not extended - appellant was forced to pay the duty involved - Held that - It is seen that the appellant had filed refund applications - Therefore, the provisions of Section 27A of the Customs Act, 1962 is clearly attracted and the said section provides for grant of interest on the expiry of three months from the date of refund application till the date of grant of refund irrespective of when the order for refund was actually passed. The ratio of the judgment of the Hon ble Apex Court in the case of Ranbaxy Laboratories cited (2011 (10) TMI 16 - Supreme Court of India ) and of the Hon ble High Court of Bombay in Voltas (2004 (9) TMI 116 - HIGH COURT OF JUDICATURE AT BOMBAY ) would apply to the facts of the case. Since Section 27A of the Customs Act itself came into force only in May, 1995 and the appellant has claimed the interest for the period from 1-12-1995 onwards - Interest on refund allowed - Decided in favor of assessee.

Summary

Issues:
- Claim for interest on refund of duty
- Interpretation of payment as duty or pre-deposit
- Applicability of Section 27A of the Customs Act, 1962
- Entitlement to interest on delayed refund

Claim for interest on refund of duty:
The appeal was against the dismissal of the applicant's claim for interest on a refund of Rs. 12,50,525 sanctioned by the adjudicating authority. The appellant imported consignments under DEEC license, faced a less charge memo, and paid duty of Rs. 12,58,525 in 1994. The lower appellate authority denied interest on the refund, stating the payment was a pre-deposit, not duty. The appellant argued that the payment was confirmed as duty and filed for a refund with interest under Section 27A of the Customs Act, citing relevant case laws.

Interpretation of payment as duty or pre-deposit:
The appellant contended that the payment made in 1994 was confirmed as duty under Section 28 of the Customs Act, not a pre-deposit. The lower adjudicating authority considered unjust enrichment before granting the refund, indicating the payment was for duty. The Tribunal agreed, stating the payment was adjusted towards duty demand, making the appellant eligible for interest on delayed refund under Section 27A.

Applicability of Section 27A of the Customs Act, 1962:
The Tribunal analyzed the provisions of Section 27A, inserted in December 1995, providing for interest on delayed refunds. Citing the Apex Court's judgment in a related matter, the Tribunal held that interest accrues from the date of the refund application, not the order date. The Tribunal found the appellant entitled to interest from December 1995 onwards till the actual refund payment date.

Entitlement to interest on delayed refund:
Considering the appellant's early refund claim in 1994 and the applicability of Section 27A, the Tribunal concluded that interest was rightfully due to the appellant from December 1995 onwards. Relying on relevant judgments and legal provisions, the Tribunal allowed the appeal, granting the appellant interest at applicable rates until the refund payment date. The decision highlighted the proper interpretation of the payment as duty and affirmed the appellant's entitlement to interest on the delayed refund.