2015 (4) TMI 159 - AT - Customs

Interest on refund claim - revenue contended that the refund amount has been sanctioned within three months from the date of judgment of Hon ble Supreme Court in dismissing the Special Leave Petition (SLP) filed by the department; and that for a substantial period, the amount was lying with the Consumer Welfare Fund and not with the department. Thus, according to impugned order, since there is no delay in sanction of refund by the Customs Department, the appellant is not entitled for interest thereon - Held that - it is an admitted fact on record that the refund claim application filed by the appellant on 24.12.1998 was ultimately sanctioned by the Assistant Commissioner (Refund) on 13.04.2011 i.e. after a lapse of more than 12 years. As per the statutory mandates of Section 27 read with Section 27A of the Act, the time limit for payment of the refund amount to the appellant by the Customs authorities (without interest) expired on 23.03.1999. Since, claimed amount was finally paid to the appellant on 13.04.2011, in our considered view, the appellant is entitled for the statutory interest from 24.03.1999 to the date when the refund was eventually paid i.e. 13.04.2011. Though, the refund amount was paid to the claimant-appellant consequent upon dismissal of SLP filed by the revenue, but the date of computation of the interest amount will commence from the date of cessation of three months of the refund application, and not from the date, when the refund amount was finally paid. - beneficiary of the principal amount is entitled for compensation in the form of interest because; he is deprived of its right of claim for a considerable period of time at the discretion of the person responsible for paying the amount. - Following decision of J.K. Cement Works -Vs - Asst. Commissioner of Central Excise & Customs, reported in 2004 (2) TMI 78 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Entitlement to interest for delayed sanction of refund of Customs duty.
2. Relevant date for computation of interest on delayed refund.

Detailed Analysis:

1. Entitlement to Interest for Delayed Sanction of Refund of Customs Duty:
The appellant filed a refund claim for excess Customs duty paid on 24.12.1998, which was ultimately sanctioned on 13.04.2011, a delay of over 12 years. The Customs authorities rejected the appellant's claim for interest on the delayed refund, arguing that the refund was sanctioned within three months from the Supreme Court's dismissal of the department's Special Leave Petition (SLP). The Tribunal examined Section 27A of the Customs Act, 1962, which mandates that if a refund is not paid within three months from the date of filing the refund application, interest is payable on the delayed amount. The Tribunal emphasized that the interest is compensatory in nature, intended to compensate the claimant for being deprived of their rightful claim for an extended period.

2. Relevant Date for Computation of Interest on Delayed Refund:
The Tribunal clarified that the relevant date for computing interest is three months from the date of filing the refund application, not from the date of the Supreme Court's decision. The Tribunal referred to the explanation in Section 27A, which deems orders of refund by appellate authorities or courts as orders under sub-section (2) of Section 27 for the purpose of interest computation. The Tribunal relied on the Supreme Court's judgment in M/s Ranbaxy Laboratories Ltd. vs. Union of India, which held that interest under Section 11BB of the Central Excise Act, 1944 (analogous to Section 27A of the Customs Act) becomes payable if the refund is not made within three months from the date of receipt of the refund application. The Tribunal concluded that the appellant is entitled to interest from 24.03.1999 (three months after the refund application) to 13.04.2011 (the date of refund payment).

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, granting the appellant consequential relief, including the payment of interest on the delayed refund amount from 24.03.1999 to 13.04.2011. The Tribunal's decision underscores the statutory obligation of Customs authorities to pay interest on delayed refunds, compensating claimants for the undue delay in receiving their rightful dues.