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2024 (4) TMI 443 - AT - CustomsInterest on delayed refund - Interest for the delay in payment of additional duty - calculation of relevant time - HELD THAT - As per Section 18(4) of the Customs Act, 1962, it is clear that on finalization of assessment of duty, assessee is entitled for refund and if refund is not made within 3 months from the date of such assessment, assessee is entitled for interest on such amount as per the rate fixed by Central Government under Section 27A of the Customs Act, 1962, till the date of refund of such amount. The ratio of the judgement relied by the appellant the matter of M/S GKN DRIVE LINE (INDIA) LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI 2013 (8) TMI 355 - CESTAT NEW DELHI , right to interest under Section 18(4) of Customs Act, 1962 is applicable if the due amount is not paid within 3 months from the date of final assessment and not to reckoned 3 months after submission of refund claim as per section 27 of the Customs Act, 1962. Only for the rate of interest, rate fixed by Central Government under Section 27A will apply. Considering the fact that adjudication/appellate authority has not considered the provisions of Sections 18(4) of Customs Act, 1962 in appellant s case, the appeal is remanded to adjudication authority to consider the plea of the appellant regarding their entitlement of interest under Section 18(4) of the Customs Act, 1962. The Adjudication Authority directed to consider and pass appropriate orders within 4 months after the receipt of the final order. Appeal is allowed by way of remand.
Issues:
The issue involves the entitlement to interest for the delay in payment of additional duty on imported goods due to a mistake in the EDI system, resulting in the appellant being forced to pay additional excise duty as CVD and seeking a refund of the excess amount paid. Details of the Judgment: 1. The appellant imported high speed diesel and motor spirit during 2008-10 and had to pay additional excise duty due to an error in the EDI system. After final assessment, a substantial refund was due to the appellant. However, the refund process was delayed, and when the due amount was finally paid, no interest for the delay was provided. 2. The appellant's request for interest was rejected by the adjudication authority and the Commissioner (Appeal) on the grounds that there was no provision in the Customs Act, 1962 for granting such interest, stating that the government is not obligated to pay interest on monies received. 3. The appellant cited Section 18(2) of the Customs Act, 1962, which allows for interest on unrefunded amounts after final assessment, emphasizing that interest should be paid if the refundable amount is not refunded within three months from the date of assessment of duty finally assessed. 4. Referring to a Tribunal decision in GKN Drive Line (INDIA) LTD Vs C C New Delhi, it was highlighted that a refund arising from the finalization of provisional assessment under Section 18(2)(a) of the Customs Act, 1962 should be eligible for interest under Section 18(4) of the Act. 5. The respondent objected to the demand for interest, arguing that the delay in refund was not due to willful negligence but caused by the appellant's failure to submit proper records as per the deficiency memo issued. The respondent reiterated the findings of the impugned orders. 6. The appellant contended that the demand for interest under Section 18(4) of the Customs Act, 1962 was raised before the Commissioner (Appeals) but was dismissed on the grounds of lack of provision for such interest. 7. The Tribunal held that as per Section 18(4), interest is payable on unrefunded amounts if not refunded within three months from the final assessment of duty, and the provision of unjust enrichment under Section 18(5) was found not applicable in the appellant's case. 8. It was clarified that the right to interest under Section 18(4) of the Customs Act, 1962 applies if the due amount is not paid within three months from the date of final assessment, and the rate of interest is determined by the Central Government under Section 27A, not from the submission of the refund claim. 9. The appeal was allowed by way of remand, directing the adjudication authority to reconsider the appellant's entitlement to interest under Section 18(4) of the Customs Act, 1962, within four months of the final order, as the provisions were not considered in the previous adjudication. Conclusion: The appellant succeeded in establishing the entitlement to interest under Section 18(4) of the Customs Act, 1962 for delays in refunding the excess amount paid due to a mistake in the EDI system.
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