2021 (9) TMI 17 - AT - Customs

Refund of duty - matter remanded back to the original adjudicating authority with observation for consideration of refund claim after production of CRC-I evidencing remission order - Section 27A of the Customs Act, 1962 - HELD THAT - A close reading of the provision of Section 27A of the Customs Act, 1962 would reveal that date of order for refund is immaterial, since interest is to be calculated after the expiry of three months from the date of receipt of such application and there is nothing mentioned in the Section to pass a separate order for interest on refund as an order under Section 27(2) would suffice for application of interest in view of use of word shall be paid , if the refund is made beyond three months of receipt of application for such refund. Therefore, applicant is entitled to get the applicable rate of interest on the refunded duty amount to be calculated three months after the filing of refund application on 28.08.2014. The appeal is allowed in part to the extent of granting of interest on the already refunded amount.

Summary

Issues:
Refund claim rejection under Section 23 of the Customs Act, 1962 - Legality of the order before the Tribunal.
Payment of interest on refunded duty amount - Interpretation of Section 27A of the Customs Act, 1962.

Refund Claim Rejection:
The case involved an appellant-importer who filed an advance bill of entry for importing paint, varnish, and other items, paying duty of &8377; 7,76,542. However, the consignment was destroyed in a fire before clearance. The appellant filed a refund claim under Section 23 of the Customs Act, which was initially rejected by the Assistant Commissioner of Customs. The Commissioner of Customs (Appeals) remanded the matter back for further consideration. The appellant challenged the legality of this order before the Tribunal.

Payment of Interest on Refunded Duty Amount:
During the appeal hearing, the appellant's counsel referred to a Supreme Court judgment related to refund under the Central Excise Act to support the claim for interest on the refunded duty amount. The Assistant Commissioner objected, stating that interest was not payable as de novo adjudication was initiated after the Commissioner's order. The Tribunal analyzed Section 27A of the Customs Act, which mandates interest payment if duty is not refunded within three months from the application date. The provision does not require a separate order for interest, and interest is calculated from three months after the refund application date. Therefore, the appellant was entitled to interest on the refunded duty amount. The Tribunal allowed the appeal partially, granting interest on the refunded amount and directing the respondent department to pay the interest component within two months from the date of the order.

This judgment addressed the issues of refund claim rejection under the Customs Act and the payment of interest on the refunded duty amount. The Tribunal clarified the entitlement to interest under Section 27A, emphasizing the calculation from three months after the refund application date. The decision provided relief to the appellant by allowing interest on the refunded amount and setting a timeline for the respondent department to make the payment.