2016 (4) TMI 767 - HC - Customs

Seeking direction of refund - interest wrongfully paid by the respondent - import of electrical goods and machinery - availed facility of deferred payment of duty by bonding the goods in a private warehouse - Tribunal directed the refund on the basis of its earlier decision and circular in F.No.475/39/90-Cus.VII dated 8.8.1990 - Held that - in so far as Section 61(2) is concerned, it refers only to the interest that becomes payable under Section 47. As a matter of fact, the present Sub-Section (2) of Section 61, was amended only by Act 27 of 1999. The amendment, on which, strong reliance is placed by the department, to Section 27(1), came in 1991. Yet, Section 61(2) does not refer to Section 27. Therefore, the view taken by the Tribunal cannot be said to be incorrect. - Decided against the revenue

Summary

Issues:
1. Appeal under Section 130 of the Customs Act, 1962 for refund of interest
2. Substantial questions of law regarding refund claims, warehousing interest, and CBEC notification
3. Interpretation of Sections 27 and 61(2) of the Customs Act

Analysis:
1. The appeal was filed by the Revenue challenging an order of the Customs, Excise and Service Tax Appellate Tribunal directing the refund of interest wrongfully paid by the respondent under Section 130 of the Customs Act, 1962. The Tribunal had allowed the refund claim, which was initially rejected by the Original Authority and confirmed by the Appellate Authority, based on the respondent's import of electrical goods and machinery with deferred duty payment by bonding the goods in a private warehouse.

2. The substantial questions of law admitted for consideration included whether the refund claims were time-barred, if refund of warehousing interest falls under Section 27 of the Customs Act, and if the Tribunal correctly considered Notification No.30/99 issued by the CBEC. The respondent's refund claim was rejected initially due to being made beyond the allowed period, but the Tribunal relied on a previous decision to direct the refund, leading to the Revenue's appeal.

3. The main contention raised by the learned Senior Panel Counsel for the appellant was that the Tribunal's decision was based on a circular from 1990, which became ineffective after the amendment to Section 27(1) in 1991. The Counsel argued that interest should be considered part of duty payment under Section 27(1), but the Court disagreed, emphasizing the distinction between duty and interest payable on duty. The Court analyzed the language of Section 27(1) and the circular to support its interpretation.

4. The Court further examined the amendments to Section 27(1) and Section 61(2) of the Customs Act, noting that while the amendment to Section 27(1) in 1991 included the term 'interest,' Section 61(2) did not specifically refer to Section 27. Therefore, the Court upheld the Tribunal's decision, stating that the interest referred to under Section 61(2) was distinct and not covered by Section 27(1). Consequently, the questions of law were answered against the appellant, leading to the dismissal of the civil miscellaneous appeal and the MP without costs.