2020 (12) TMI 202 - HC - Customs

Refund of the Extra Duty Deposit (EDD) - Provisional Assessment not finalised - no justifiable cause to delay the refund for all these years merely on the ground that some investigation is pending - HELD THAT - There is absolutely no merit in the present Writ Appeal and we fail to understand the bona fide of the Customs Department to challenge even this kind of innocuous direction of the learned Single Judge while disposing of the Writ Petition and why the Department should file intra-court Appeals just for the sake of litigation. It is not at all justified and strong action deserves to be taken in this regard as the Government Department cannot be permitted to be a voluntary litigant in the Constitutional Courts especially to challenge the orders of the learned Single Judge without any valid rhyme or reason. The alleged reason assigned by the Department that there was some investigation pending of which no details are placed on record, is not at all a justifiable reason in the light of Board's own Circular as quoted by the learned Single Judge. No such material has been placed before this court to justify the action of the Customs Department not to finalise the Provisional Assessment for 16 years and even by now to keep the EDD a mere Security Deposit by Importer/Petitioner with them like this. Refund is directed alongwith interest - appeal of Revenue dismissed.

Summary

Issues:
- Delay in finalizing provisional assessment for Bills of Entry from 2004
- Refund of Extra Duty Deposit (EDD) on imported Coal from Indonesia
- Justifiability of Customs Department's actions in delaying refund
- Entitlement to interest on delayed refund under Section 27A of the Act
- Compliance with Board Circulars and Notifications

Analysis:
1. Delay in Finalizing Provisional Assessment: The High Court addressed the issue of delay in finalizing the provisional assessment for Bills of Entry from 2004. The learned Single Judge found that despite clear circulars directing the finalization of assessments, the Customs Department failed to act promptly. The Court noted that there was no justifiable cause for the prolonged delay in refunding the EDD paid by the Assessee.

2. Refund of Extra Duty Deposit (EDD): The Court examined the matter of refunding the EDD on imported Coal from Indonesia. The learned Single Judge directed the refund of the EDD to the Petitioner within a specified timeframe, emphasizing the lack of valid reasons for withholding the refund. The Court dismissed the Department's argument of pending investigations as a reasonable cause for the delay.

3. Justifiability of Customs Department's Actions: The Court scrutinized the Customs Department's actions and found them unjustified. The Department's contention of pending investigations was deemed insufficient to warrant the delay in finalizing the provisional assessment and refunding the EDD. The Court emphasized the importance of complying with circulars and directives to avoid unnecessary litigation.

4. Entitlement to Interest under Section 27A: The issue of entitlement to interest on delayed refunds under Section 27A of the Act was thoroughly discussed. The Court upheld the Assessee's right to interest at a rate of 6% as per the relevant notification. Furthermore, the Court specified that if there was a delay in refunding the EDD, the Department would be liable to pay interest at an increased rate of 9%.

5. Compliance with Board Circulars and Notifications: The Court highlighted the significance of complying with Board circulars and notifications. It emphasized that the Department's failure to adhere to directives, despite the absence of any interim order in their favor, was unwarranted. The Court stressed the necessity of following legal guidelines to prevent unnecessary litigation and delays in refunding dues to the Assessee.

In conclusion, the High Court dismissed the Writ Appeal of the Revenue Department, directing the immediate refund of the EDD amount to the Petitioner with interest. The Court underscored the importance of timely compliance with legal provisions and circulars to avoid unnecessary delays and litigation.