2019 (9) TMI 132 - AT - Customs

Grant of interest on delayed refund - appellant had paid the duty under-protest during the pendency of litigation - Section 27 of Customs Act, 1962 - HELD THAT - As per Section 27 of the Customs Act, 1962, the appellants are eligible for interest in case refund is not sanctioned within three months from the date of application. On perusal of the facts presented before me, it is seen that the department has filed stay application before the Tribunal. The stay application was dismissed on 30.4.2013. The refund ought to have been sanctioned to the appellant on dismissal of the stay application. Thus, there is indeed delay in sanctioning the refund. The appellant is therefore eligible for the interest on the delayed refund - the appellants are eligible for interest from three months after the dismissal of the stay application - the impugned order rejecting the interest on delayed refund is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues: Interest on delayed refund

Analysis:
The appeal before the Appellate Tribunal CESTAT CHENNAI arose from a Commissioner (Appeals) order rejecting the appellant's request for interest on a delayed refund. The appellant had initially filed an appeal against an order related to the assessable value, which was decided in their favor by the Commissioner (Appeals) through separate orders. Subsequently, refund claims were filed by the appellant under Section 27 of the Customs Act, 1962. Despite the dismissal of the department's stay application by the Tribunal, the refund was not immediately sanctioned, leading to a significant delay in payment. The appellant contended that they were entitled to interest on the delayed refund as per Section 27A of the Customs Act, 1962, which mandates refund sanction within three months of application. The appellant argued that the lower authority wrongly denied interest, citing that the refund was provisional and lacked a finalizing order.

The department, represented by the ld. AR Ms. T. Usha Devi, justified the delay in refund sanctioning by stating that the department had filed an appeal with a stay application before the Tribunal, awaiting the appeal outcome. However, upon hearing both sides, the Member (Judicial) analyzed the situation. The key issue revolved around the entitlement to interest on a delayed refund, as stipulated in Section 27 of the Customs Act, 1962. The Member noted that the department's stay application had been dismissed on 30.4.2013, indicating that the refund should have been sanctioned promptly after this event. Consequently, the Member found merit in the appellant's claim for interest on the delayed refund, dating from three months post the dismissal of the stay application. Critically, the Member deemed the rejection of interest in the impugned order as unjustified and ordered the lower authority to quantify and pay the interest due on the delayed refund immediately. The appeal was allowed, overturning the previous decision and granting the appellant the entitled interest on the delayed refund.