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2013 (6) TMI 148 - HC - CustomsRefund of SAD - Interest on belated refund - Circular No.6/2008 - held that - it is evident that the Board is of the view that there is no specific provision for payment of interest in the Notification No.102/2007-Customs, dated 14.9.2007. That reason is not correct as the grant of exemption under Section 25(1) of the Customs Act, 1962 is one facet. The claim for refund is contingent on complying with the requirement as specified in the notification. The exemption from payment of special additional duty as payable under Section 3(5) of the Customs Tariff Act, 1975 is exempted under Section 25(1) of the Customs Act, 1962. The refund of duty paid will have to be read in terms of Section 3(8) of the Customs Tariff Act, 1975 and not otherwise. The refund application should be filed and entertained only under Section 27 of the Customs Act, 1962 and there is no method or manner prescribed under Section 25 of the Customs Act, 1962 to file an application for refund of duty or interest. To state that no interest on delayed payment is contemplated in the notification issued under Section 25 of the Customs Act, 1962 is a misconception of the provisions of the Customs Act, 1962. When Section 27 of the Customs Act, 1962 provides for refund of duty and Section 27A of the Customs Act, 1962 provides for interest on delayed refunds, the authority cannot override the said provisions by a circular and deny the right which is granted by the provisions of the Customs Act, 1962 and Customs Tariff Act, 1975. Therefore, paragraph 4.3 of the Circular No.6/2008-Customs, dated 28.4.2008 is contrary to the statute and becomes totally inappropriate. When the circular is contrary to the provisions of the Customs Act, 1962 and Customs Tariff Act, 1975, it has to be struck down as bad. - Decided in favor of assessee.
Issues Involved:
1. Validity of Circular No.6/2008-Customs, dated 28.4.2008, particularly paragraph 4.3. 2. Entitlement of interest on delayed refunds under Section 27A of the Customs Act, 1962. Issue-Wise Detailed Analysis: 1. Validity of Circular No.6/2008-Customs, dated 28.4.2008, particularly paragraph 4.3: The petitioner challenged Circular No.6/2008-Customs, dated 28.4.2008, which restricted the claim of interest on delayed refunds under Notification No.102/2007-Customs, dated 14.9.2007. The circular stated that there was no specific provision for payment of interest under the said notification, thus denying interest on delayed refunds. The court analyzed the provisions of the Customs Act, 1962, and the Customs Tariff Act, 1975, and found this reasoning inconsistent with the statutes. The court emphasized that the exemption notification under Section 25(1) of the Customs Act, 1962, and the refund process under Section 27 of the Customs Act, 1962, are independent but interconnected. The refund of special additional duty paid must be processed under Section 27, and if delayed, interest under Section 27A applies. The court concluded that paragraph 4.3 of the circular is contrary to the statutory provisions and must be struck down. 2. Entitlement of interest on delayed refunds under Section 27A of the Customs Act, 1962: The petitioner argued that the department should pay interest on delayed refunds as per Section 27A of the Customs Act, 1962, which mandates interest if a refund is not made within three months from the date of receipt of the application. The respondents contended that the special additional duty refund under Notification No.102/2007-Customs is an automatic process and does not fall under Section 27, thus not attracting interest under Section 27A. The court rejected this argument, stating that the refund application must be processed under Section 27, and if delayed, interest under Section 27A is applicable. The court highlighted that the provisions of the Customs Act, 1962, and the Customs Tariff Act, 1975, clearly mandate this process, and any circular contrary to these provisions is invalid. Conclusion: The court allowed the writ petition, quashing paragraph 4.3 of Circular No.6/2008-Customs, dated 28.4.2008, as it was contrary to the statutory provisions. The court directed the respondents to consider the pending refund application of the petitioner in light of Sections 27 and 27A of the Customs Act, 1962.
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