2013 (7) TMI 570 - HC - Customs

Refund of duty with interest order of refund of duty was passed but not paid even after one and half years later - the short question is whether the respondents should pay interest for the said delay in refund - Held that - Department were liable to pay interest to the assessee - Board s circular dated 3 June 1998 clarifies that the refund not to be withheld on the ground that an appeal is filed against the order giving relief to an assessed unless a stay order has been obtained court relied upon Tata Infotec Limited versus Collector of Customs (2004 (2) TMI 80 - HIGH COURT OF DELHI ) decided in favour of assessee.

Summary

Issues:
1. Refund of customs duty with interest
2. Classification of imported goods under Customs Tariff Act, 1975
3. Delay in refund and entitlement to interest

Issue 1: Refund of customs duty with interest:
The petitioner, M.D. Textile Industries Limited, filed a writ petition seeking a refund of customs duty amounting to Rs.3,59,744.95 along with interest from 22nd May, 1989. The court noted that the respondents had issued the refund on 17th March, 1993, after a delay of about one and a half years. The main question was whether the respondents should pay interest for this delay. The court held that the respondents should indeed pay interest for the delay as there was no justification provided for the delay in refunding the amount.

Issue 2: Classification of imported goods under Customs Tariff Act, 1975:
The dispute arose when the petitioner imported multi cable transit against a bill of entry and sought clearance under a specific heading. The respondents contended that the goods should be classified under a different heading of the Customs Tariff Act. After a series of adjudications, the Assistant Collector finally accepted the petitioner's contention and assessed the bill of entry under the heading as claimed by the petitioner. The consignment had been released after the petitioner paid the admitted duty and 50% of the disputed duty as per the High Court's directions.

Issue 3: Delay in refund and entitlement to interest:
The court analyzed the reasons provided by the respondents for the delay in processing the refund application. The respondents had cited the need to file an appeal within a specified period and an amendment to the Customs Act as reasons for the delay. However, the court found these reasons insufficient and illogical. The court referred to relevant legal provisions and a Division Bench decision to support its conclusion that the refund should have been processed without additional conditions imposed by the amendment. Ultimately, the court held that the respondents were liable to pay interest to the petitioner for withholding the refund amount without justification.

In conclusion, the court allowed the writ petition and directed the respondents to pay interest to the petitioner at a rate of 12% per annum from the date the refund became due until the actual payment date. The court also awarded costs to the petitioner.