2018 (5) TMI 1567 - AT - Customs

Interest on delayed refund - Section 27A of the Customs Act, 1962 - Held that - the impugned order has recorded that when the refund claim was submitted by the appellant, it was not complete in all respects and further supporting documents were asked for by the Department and after receipt of all supporting documents, the refund has been sanctioned within a period of three months. So the liability of the Department to pay interest in terms of Section 27A is not attracted in this case - appeal dismissed - decided against appellant.

Summary

Issues:
1. Entitlement to interest on delayed refund of customs duty and interest under Section 27A of the Customs Act, 1962.

Analysis:
The appeal was filed against Order-in-Appeal No. 94/2007 regarding the entitlement of imported capital goods for duty-free benefit under the EOU scheme. The appellant had paid disputed customs duty and interest, seeking a refund. The lower authorities refunded a certain amount, but the appellant claimed interest on delayed refund amounts. The appellant argued for interest under Section 27A of the Customs Act, citing the Supreme Court decisions in the cases of Ranbaxy Laboratories Ltd. and UOI v. Hamdard (Waqf) Laboratories, supporting their claim for interest on delayed refunds.

The Department contended that the delay in refund sanction was due to incomplete submission of necessary documents by the appellant. However, after receiving all supporting documents, the refund was sanctioned within three months, justifying that no interest was payable to the appellant. The Tribunal considered both sides' submissions and reviewed the records.

The Tribunal acknowledged the settled dispute resulting in excess duty payment and subsequent refund to the appellant. The issue focused solely on the demand for interest on the refund under Section 27A of the Customs Act, 1962. While recognizing the requirement to pay interest on refunds sanctioned beyond three months, the Tribunal noted that the refund claim was initially incomplete, necessitating additional supporting documents. Upon receipt of all necessary documents, the refund was processed within the stipulated three-month period. Consequently, the Tribunal concluded that the Department was not liable to pay interest in this case, leading to the dismissal of the appellant's appeal.

Therefore, the Tribunal dismissed the appeal, emphasizing that the Department was not obligated to pay interest on the refund as the refund was processed within the required timeframe after the submission of complete supporting documents. The decision was dictated in open court on 06/02/2018.