2022 (6) TMI 109 - AT - Customs

Entitlement to interest on the grant of belated refunds - limitation under Section 128 of the Customs Act - HELD THAT - The ld. Commissioner (Appeals) has mis-conceived the issue of interest by rejecting the same by referring to the provisions of Section 128 of the Customs Act. The appellant is entitled to interest from the end of three months from the date of refund application before the Adjudicating Authority, till the date of grant of refund in cash. The Adjudicating Authority are directed to disburse the interest within a period of 45 days from the date of receipt/service of copy of this order. Appeal allowed.

Summary

Issues:
- Rejection of claim of interest on belated refunds by Commissioner (Appeals)
- Validity of payment of duty through scrips for refund
- Applicability of Section 27 A for interest on delayed refunds
- Interpretation of Section 128 of the Customs Act regarding limitation for filing appeals

Analysis:
1. Rejection of Interest Claim: The main issue revolved around the rejection of the appellant's claim for interest on belated refunds by the Commissioner (Appeals). The appellant contended that the rejection was incorrect as the payment of duty through scrips was considered a valid mode of payment. The Commissioner (Appeals) referred to a previous Tribunal ruling and denied the interest claim based on the limitation under Section 128 of the Customs Act.

2. Validity of Payment through Scrips: The appellant had paid duty through scrips at the time of importation and sought a refund of the excess duty paid. The appellant approached the DGFT for re-credit of the refunded amount, which was rejected. Subsequently, the Adjudicating Authority refused to grant a cash refund, stating the absence of directives for such refunds. However, the Commissioner (Appeals) recognized the duty payment through scrips as valid and directed the refund in cash based on a Tribunal ruling.

3. Applicability of Section 27 A: The appellant argued for the application of Section 27 A, which mandates interest payment if a refund is not granted within three months from the application date. The appellant emphasized the statutory requirement for interest payment, asserting that the Revenue Authority has no discretionary power in this matter. The Tribunal acknowledged this provision and directed the Adjudicating Authority to disburse the interest within 45 days from the date of the order.

4. Interpretation of Section 128: The appellant challenged the Commissioner (Appeals)'s reliance on Section 128 of the Customs Act for rejecting the interest claim, arguing that it was misapplied. The Tribunal agreed with the appellant, holding that interest should be paid from three months after the refund application until the grant of the refund in cash. The Tribunal clarified that the appellant was entitled to interest as per the statute, contrary to the Commissioner (Appeals)'s decision.

In conclusion, the Tribunal allowed the appeal, emphasizing the entitlement of the appellant to interest on the delayed refund and directing the Adjudicating Authority to disburse the interest within a specified timeline. The judgment clarified the legal aspects concerning duty payment modes, interest provisions, and the correct application of relevant sections of the Customs Act.