2007 (8) TMI 247 - Commissioner - Customs

Refund claim of Rs.7,11,279/- for the interest paid on warehousing u/s 61 - held that the provisions of Section 27(which deals with the refund of duty and the interest paid on such duty) will not apply to impugned refund claim - Circular.475/39/90 has also clarified that warehousing interest is distinguishable from Customs duty - burden of interest paid on warehousing could not have been passed on to the customer as the same is paid at the time of clearance of the goods refund admissible

Summary

Issues:
1. Rejection of refund claim as time-barred.
2. Crediting the refund amount to Consumer Welfare Fund due to failure to prove burden not passed on to customers.
3. Applicability of Sec. 27 of the Customs Act, 1962 to interest on warehousing.
4. Interpretation of CBEC Circular F.No.475/39/90 Cus.VII dated 8-8-1990.
5. Determining whether interest on warehousing could have been passed on to the customer.

Analysis:
1. The adjudicating authority rejected a refund claim for interest on warehousing as time-barred for specific Bills of Entry. The appellant contended that the claim was filed within the time limit and relied on a covering letter dated before the deadline. However, insufficient evidence led to the rejection of this contention. The remaining refund amount was credited to the Consumer Welfare Fund due to the importer's failure to demonstrate that the burden was not passed on to customers.

2. The judgment delves into the applicability of Sec. 27 of the Customs Act, 1962 to interest on warehousing. It distinguishes between interest paid on duty and warehousing interest under Sec. 61(2) of the Act. Citing a precedent (M/s. J.K. Synthetics Ltd. v. Commissioner of Customs, Jaipur), it is established that Section 27 does not govern refunds related to warehousing interest. The CBEC Circular further clarifies this distinction, emphasizing that warehousing interest is not akin to customs duty under Sec. 2(xv).

3. The judgment also addresses the question of passing on the burden of interest on warehousing to customers. It highlights that such interest is paid during goods clearance, making it unlikely to be passed on. Consequently, the refund claim falls outside the presumption under Section 28D of the Customs Act, 1962. As a result, the sanctioned refund amount is directed to be issued to the appellant, resolving the appeal in their favor.