2022 (6) TMI 110 - AT - Customs

Entitlement to interest on the 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. It is held that 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 Involved:
- Rejection of claim of interest on belated refunds by the Commissioner (Appeals) based on the limitation under Section 128 of the Customs Act.

Analysis:
The judgment dealt with the issue of whether the Commissioner (Appeals) rightly rejected the claim of interest on belated refunds by referring to the limitation under Section 128 of the Customs Act. The appellant, an importer of fabrics, had paid duty for clearance at a higher value than declared, contested the assessment, and upon winning the appeal, applied for a refund of the excess duty paid. The Commissioner (Appeals) rejected the claim of interest on the grounds of limitation under Section 128. The appellant argued that the rejection based on Section 128 was erroneous as it pertained to the limitation for filing an appeal, not the claim of interest. The appellant contended that Section 27 A mandates interest payment if a refund is not granted within three months of application, emphasizing the statutory requirement for interest payment. The Departmental Representative supported the Commissioner's decision.

The Tribunal found that the Commissioner (Appeals) misinterpreted the issue of interest by erroneously invoking Section 128 of the Customs Act to reject the claim. The Tribunal held that the appellant was entitled to interest from three months after the refund application until the grant of refund in cash. The Tribunal directed the Adjudicating Authority to disburse the interest within 45 days from the date of the order. The judgment highlighted the mandatory nature of interest payment under Section 27 A and emphasized that the Revenue Authority lacks discretionary power in interest matters. Ultimately, the Tribunal allowed the appeals, overturning the Commissioner's decision and ordering the payment of interest on the belated refunds.