2015 (12) TMI 996 - AT - Customs

Claim of interest on refund of the redemption fine, penalty and differential duty - delayed refund - Held that - Commissioner (Appeals) has followed the provisions of Section 27A and allowed refund from the expiry of three months from the date of application under Section 27 (1). This is what the Section 27A prescribes. Refund has to be allowed as per provisions as it existed at the time when refund arose as a consequence of Tribunal order. Further more I find that the learned Counsel has failed to point out any authority which allows interest on the refund of fine and penalty. The Section 27A clearly covers only the payment of interest on duty. Since there is no such provision in law, the same cannot be allowed. - Decided against Assessee.

Summary

Issues:
- Refund of redemption fine, penalty, and differential duty
- Claim for interest on the delay in payment of redemption fine, penalty, and duty
- Legal provision for grant of interest on refund of fine and penalty

Refund of Redemption Fine, Penalty, and Differential Duty:
The appellants imported goods in 2001, facing challenges in the value of goods, leading to confiscation, redemption fine, penalty imposition, and differential duty payment. After pursuing the matter through higher forums, the Tribunal granted them benefits in 2006, resulting in the due refund of redemption fine, penalty, and duty. The refund of redemption fine and penalty was allowed, but the duty refund was appropriated to the Consumer Welfare Fund. The Commissioner (Appeals) later directed the refund of the duty amount, following a detailed timeline of events.

Claim for Interest on Delay in Payment:
The appellants sought interest for the delay in payment of redemption fine, penalty, and duty. The Commissioner (Appeals) allowed interest on the duty amount for a specific period but disallowed interest on the refund of fine and penalty citing the absence of a legal provision for such grants. The appellants appealed for interest from the date of payment to the date of refund at commercial rates, or alternatively, interest from a specified period to the date of refund, along with interest on the delay in payment and at commercial rates.

Legal Provision for Grant of Interest on Refund of Fine and Penalty:
The Tribunal, in its analysis, highlighted that there was no provision in the Act for allowing interest on refunds at commercial rates, compounded rates, or from the date of duty payment. Section 27A, as applicable at the time of the Tribunal order in 2006, mandated interest on delayed refunds from the filing of the application under Section 27(1) of the Customs Act, 1962. The Commissioner (Appeals) correctly followed the provisions of Section 27A in allowing the refund as per the law, which only covered interest on duty refunds. The Tribunal dismissed the appeal, emphasizing the absence of legal provisions for interest on the refund of fine and penalty.

This judgment clarifies the legal framework governing refunds, interest on delayed refunds, and the scope of provisions for interest payments in customs matters. The decision underscores the necessity of adhering to statutory provisions while addressing claims for interest on various components of refunds in customs cases.