2014 (12) TMI 646 - HC - Customs

Interest under Section 18(4) - Delay in sanction of refund - Held that - In this case the show cause notice dated 7th April, 1995 proposing recovery of duty, imposition of fine and penalty under the provisions of the Customs Act, 1962 as also another show cause notices dated 9th May, 1995 on the same allegations, were adjudicated and withdrawn on 14th November, 1996. It is the department s stand throughout that this does not constitute a final assessment within the meaning of sub-section (2) of Section 18 because it was challenged and the challenge raised by the department was rejected by the final order of the Tribunal on 27th September, 2001. Therefore, we do not see any reason as to how any assistance can be derived from the proceedings and which are in any event of 1995-1997 and before the Directorate General of Foreign Trade. Since the payment of interest was withheld till 8th October, 2003 and released only on 11th November, 2003, we find that even otherwise the direction to pay interest cannot be faulted and the Tribunal was in no error of modifying the order of the Customs (Appeals) in the given facts and circumstances. This additional submission also therefore does not raise any substantial question of law. - Decided against Revenue.

Summary

Issues:
Challenge to the awarding of interest under Section 18(4) of the Customs Act, 1962.
Concurrent orders of the Commissioner of Customs (Appeals) and the Tribunal.

Analysis:
The appellant challenged the orders of the Commissioner of Customs (Appeals) and the Tribunal regarding the payment of interest under Section 18(4) of the Customs Act, 1962. The appellant argued that the Tribunal erred in directing the payment of interest from a date contrary to the provisions of the Act. However, the Court disagreed with the appellant's submission. The respondent had purchased a transferable Value Based Advance License in 1994 and imported goods under this scheme. The goods were cleared provisionally, and a refund was requested due to the withdrawal of show cause notices. The refund was sanctioned in 2003, and interest was awarded for the delayed payment. The Court found the directions to pay interest justified, considering the prolonged delay in refunding the amount due to the appellant. The Tribunal's decision to calculate interest from the withdrawal of the show cause notices in 1996 was deemed appropriate under Section 18(4) of the Customs Act, 1962. The Court dismissed the appeal, stating that no substantial question of law was raised by the appellant.

The appellant further argued that the Tribunal erred in modifying the direction of the Commissioner of Customs (Appeals) due to the revocation and restoration of the license by the Directorate General of Foreign Trade. However, the Court found no merit in this argument. The show cause notices proposing recovery of duty were withdrawn in 1996, and the department's challenge to this withdrawal was rejected in 2001. The Court concluded that the delay in refunding the amount until 2003 justified the payment of interest as directed by the Tribunal. The Court dismissed this additional submission, stating that it did not raise any substantial question of law. The appeal was therefore dismissed, affirming the Tribunal's decision to award interest based on the circumstances surrounding the delayed refund process.