2018 (9) TMI 1674 - AT - Customs

Interest on delayed SAD Refund - N/N. 102/2007 dt. 14.09.2007 - refund was rejected on the ground of time bar - The appellant ere not issued with deficiency memo to produce Chartered Accountant Certificate and the memo was produced when the matter was remanded by Tribunal to Adjudicating authority and it is then the case of the Department that the time has to be computed only from the date on which the respondent produced the Chartered Accountant Certificate. Held that - The argument of Department is not acceptable. If there was any deficiency in the documents the Department ought to have issued a Deficiency Memo stating that the Chartered Accountant Certificate is not proper at the time of receipt of the refund application itself. After the matter has travelled up to the Tribunal the Department cannot issue a fresh Deficiency Memo to put forward a further ground for denying the refund. The decision in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT OF INDIA applies to the present case where it was held that Liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. Interest allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Rejection of interest on delayed refund by the Department.
2. Granting of interest on delayed refund by the Commissioner (Appeals).
3. Validity of the Chartered Accountant Certificate in the refund process.
4. Allegation of purposeful delay by the Department in issuing Deficiency Memo.

Analysis:

1. The Department rejected the interest on delayed refund, arguing that the Chartered Accountant Certificate was received after the remand by the Tribunal, making the refund claim complete only on that date. As the refund was granted within 90 days from this completion date, the Department contended that the respondent was not eligible for interest. The Department also cited Section 27A of the Customs Act, 1962 to support its stance.

2. The Commissioner (Appeals) ordered to pay interest on delayed refund, finding a delay in the refund process. The Commissioner relied on the decision in M/s. Ranbaxy Laboratories Ltd. Vs. Union of India to support the decision. The Commissioner held that the delay in sanctioning the refund warranted the payment of interest, starting from three months after the filing of the refund application.

3. The respondent argued that the Department's issuance of a Deficiency Memo regarding the Chartered Accountant Certificate after a significant delay was an attempt to deny interest on delayed refund purposefully. The respondent highlighted that no Deficiency Memo was issued initially when the refund claims were filed, and the Certificate was produced along with the claims. The respondent also referred to a Public Notice and a legal precedent to support their position.

4. The Tribunal dismissed the Department's appeal, emphasizing that no Deficiency Memo was issued initially regarding the Certificate. The Tribunal noted that the matter was remanded to the adjudicating authority to sanction the refund, and the subsequent issuance of a Deficiency Memo was not acceptable. The Tribunal also upheld the Commissioner's decision, citing the relevance of the legal precedent considered in the case.

In conclusion, the Tribunal upheld the Commissioner's decision to grant interest on delayed refund, dismissing the Department's appeal. The Tribunal emphasized the importance of timely communication of deficiencies by the Department and found no grounds to interfere with the Commissioner's ruling based on legal precedents.