2018 (6) TMI 48 - AT - Customs

Interest on delayed Refund - finalization of assessment not done within time frame - litigation pending before various forums for entire period till finalization of assessment - contention of the appellant is that there has been inordinate delay in finalizing the assessment and granting refund which resulted in withholding of legitimate amount causing monetary loss and hardships to the appellant which has to be compensated by way of paying interest on the sanctioned refund. Held that - On facts, it is brought out that the refund has been sanctioned within three months from the date of finalization of provisional assessment - Section 18(4) provides to pay interest only when the refund is delayed beyond three months after finalization of assessment. For the entire period till the finalization of assessment, there were litigations pending before various forums and after the finalization of assessment, refund has been sanctioned within a period of three months. When the statute does not provide to pay interest, the Tribunal which is a creature of the statute cannot grant any amount in the nature of compensation. The claim of the appellant for interest on delayed refund cannot sustain - appeal dismissed - decided against appellant.

Issues Involved:
1. Provisional assessment and finalization of duty.
2. Refund claim and its rejection as time-barred.
3. Applicability of unjust enrichment doctrine.
4. Entitlement to interest on delayed refund.

Detailed Analysis:

1. Provisional Assessment and Finalization of Duty:
The appellant, M/s. GMMCO Ltd., engaged in importing spare parts for heavy machinery, had their transactions referred to the Special Valuation Branch (SVB) for investigation. Pending this, their bills of entry were provisionally assessed with a 20% Extra Duty Deposit (EDD). The Assistant Commissioner of Customs (SVB) finalized the assessment on 4.9.1991, loading the value declared by the appellant by 8.3%. The appellant's appeal against this order was upheld by the Collector (Appeals) but limited to the period before the Customs Valuation Rules, 1988. The Tribunal rejected the appellant's appeal and upheld the department's appeal, which was later remanded by the Supreme Court for fresh consideration. The Tribunal, on remand, directed the assessment based on the transaction value, which was upheld by the Supreme Court, leading to the finalization of assessments on 10.10.2015 after a contempt notice from the High Court.

2. Refund Claim and Its Rejection as Time-Barred:
The appellant filed a refund claim on 11.12.2001 for ?1,14,44,338/- for the period 1994 to 1998, which was rejected on 8.2.2002 by the Deputy Commissioner of Customs (Refunds) as time-barred. The Commissioner of Customs (Appeals) allowed the appeal against this rejection, directing the refund claims to be processed after considering unjust enrichment. The Tribunal directed the original authority to finalize the provisional assessment and allowed the appellant to file a refund claim thereafter, as per the limitation under Section 27 of the Customs Act, 1962. The High Court dismissed the department's appeal, stating that the doctrine of unjust enrichment does not apply to provisional assessments even after finalization.

3. Applicability of Unjust Enrichment Doctrine:
The High Court held that the doctrine of unjust enrichment is not applicable to provisional assessments, even after finalization. This was upheld despite the department's restoration petition and subsequent appeal to the Supreme Court being dismissed. The appellant's request for refund, including interest, was based on the contention that the delay in finalizing the provisional assessment caused undue hardship and financial loss.

4. Entitlement to Interest on Delayed Refund:
The appellant argued that the Commissioner (Appeals) erred in not accounting for the delay in finalizing the provisional assessment, which caused financial loss. They cited the Tribunal's directive to finalize the assessment within four months and claimed interest based on the delay attributable to the department. The appellant relied on the case of Sandvik Asia Ltd. vs. Commissioner of Income Tax, Pune, where the Supreme Court held that the Revenue must compensate for the delay in refunding the excess tax. The department, however, contended that interest is payable only if the refund is delayed beyond three months from the finalization of the assessment, which was done within the stipulated period in this case. The Tribunal upheld the department's view, stating that the statutory provision under Section 18(4) of the Customs Act, 1962, does not provide for interest if the refund is sanctioned within three months of finalization.

Conclusion:
The Tribunal dismissed the appellant’s claim for interest on the delayed refund, upholding the impugned order. It emphasized that the statutory provisions do not allow for compensation beyond what is explicitly provided, and the refund was granted within the legally prescribed period following the finalization of the assessment.

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