2021 (4) TMI 386 - AT - Customs

Interest on delayed Refund of SAD - case of Revenue is that the necessary documents were filed only on 16.02.2019 and from such date the refund has been granted within 3 months and therefore no interest is liable to be paid to the appellant - HELD THAT - It is seen that refund claims were filed by the appellant in March 2014 and April 2014. The same has been sanctioned only on 10.06.2019. The department was always a party to the litigation before Commissioner (Appeals) as well as the Tribunal. When the matter was agitated by the appellant for denial of refund alleging that appellant has not complied with condition 2(b) of the notification, the Department had sufficient knowledge about the proceedings as well as the order passed by the Tribunal. Even after the order passed by the Tribunal, the department has waited for 2 years to sanction the refund. Further, as correctly pointed out by Ld. Counsel that refund has not been rejected for not furnishing necessary documents. When the department was a party to the proceedings before Commissioner (Appeals) as well as the Tribunal, the department ought to have taken steps to refund the amount when the litigation has been finalized at the Tribunal level - in the OIO as well as the order impugned herein the date of refund claim is noted as 3/2014 and 4/2014. The appellant is eligible for interest on the refund amount after 3 months from the date of filing of refund claim - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of interest on refund amount.
2. Compliance with condition 2(b) of the notification.
3. Delay in sanctioning the refund.
4. Sufficiency of documents for processing the refund claim.

Analysis:
1. Denial of Interest on Refund Amount:
The appellant filed refund claims in 2014, which were sanctioned in 2019 without any interest. The appellant contended that as per Section 27A, interest should be granted if the refund is not processed within 3 months. The appellant cited the case of Shelf Drilling International Inc. Vs Union of India to support this argument. The Tribunal agreed with the appellant, emphasizing that interest is due on the refund amount after 3 months from the date of filing the claim. Consequently, the appeal was allowed with consequential relief.

2. Compliance with Condition 2(b) of the Notification:
The initial rejection of the refund claims was based on the appellant's alleged non-compliance with condition 2(b) of the notification. The appellant argued that the denial was not due to the lack of necessary documents but rather because of the failure to meet condition 2(b). The department later used a clarification provided by the appellant regarding typographical errors as a reason to deny the claim. However, the Tribunal noted that the clarification was not a document necessary for processing the claim. It was highlighted that the department, being aware of the proceedings and orders, delayed the refund sanction for two years after the Tribunal's decision.

3. Delay in Sanctioning the Refund:
The Tribunal observed that the department, being a party to the litigation, should have processed the refund promptly after the Tribunal's decision. Despite the lack of rejection due to insufficient documents, the refund was delayed on the grounds of non-compliance with condition 2(b). The Tribunal emphasized that mere corrections or clarifications provided later cannot be used to delay or deny a refund claim that was filed in a timely manner.

4. Sufficiency of Documents for Processing the Refund Claim:
The appellant's submission of necessary documents in 2019 was deemed sufficient for processing the refund claim. The department's contention that the appellant had not furnished adequate documents earlier was refuted, as the denial was primarily based on the alleged non-compliance with a specific condition of the notification. The Tribunal highlighted that the department's delay in processing the refund, despite being aware of the proceedings, was unjustified.

In conclusion, the Tribunal ruled in favor of the appellant, stating that interest on the refund amount is applicable after 3 months from the date of filing the claim. The delay in sanctioning the refund and the denial of interest were found to be unjust, leading to the allowance of the appeal with consequential relief.