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2024 (9) TMI 129 - HC - CustomsInterest on the delayed disbursal of refund flows - whether the respondents are justified in denying the writ petitioner interest in terms as contemplated under Section 27A of Customs Act 1962? - HELD THAT - The observation of the amount claimed not being duty is clearly being misinterpreted and construed dehors the context in which it appears. All that the Court intended to convey was that the amount which the petitioner had mistakenly deposited, could never have been recovered or retained by the Customs authorities. This is in light of the legal position which stood duly enunciated by the Supreme Court in SRF Ltd. 2015 (4) TMI 561 - SUPREME COURT itself. Therefore, the observation of the amount not being duty is liable to be understood in the aforesaid context - the contention of inapplicability of Section 27A can neither be countenanced nor sustained. The restitutory element of interest is yet another aspect which assumes significance in the facts of the present case and which was succinctly explained and acknowledged by the Supreme Court in SOUTH EASTERN COALFIELDS LTD. VERSUS STATE OF M.P. ORS. 2003 (10) TMI 638 - SUPREME COURT where it was held that ' Once the doctrine of restitution is attracted, the interest is often a normal relief given in restitution. Such interest is not controlled by the provisions of the Interest Act of 1839 or 1978.' The respondents is liable to pay interest from the date of the moving of the original application on 24 June 2016. The said interest would flow up to 29 November 2018 when refunds were ultimately effected - petition allowed.
Issues Involved:
1. Entitlement to interest on the delayed refund of excess Countervailing Duty (CVD). 2. Applicability of Section 27A of the Customs Act, 1962 regarding interest on delayed refunds. 3. Interpretation of the term "duty" in the context of Section 27A. 4. The impact of the Supreme Court judgment in SRF Ltd. on the refund claim. 5. The applicability of the limitation period under Section 27 of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Entitlement to Interest on the Delayed Refund of Excess CVD: The petitioner claimed interest on a sum of INR 13,16,64,468/- which was erroneously recovered as CVD during the period from March 26, 2015, to June 22, 2015. The principal amount was refunded on November 29, 2018, following the judgment in "Telecare I." The Court noted that the petitioner was entitled to a refund, as recognized in the previous judgment, and the only surviving issue was the entitlement to interest on the delayed refund. 2. Applicability of Section 27A of the Customs Act, 1962 Regarding Interest on Delayed Refunds: Section 27A of the Customs Act, 1962 provides for interest on delayed refunds if the refund is not made within three months from the date of receipt of the application. The respondents argued that they processed the refund within three months of the application made on October 23, 2018, and thus no interest was payable. However, the Court found this argument misconceived, holding that the original refund application was made on June 24, 2016, and interest should be calculated from three months after this date until the refund was made on November 29, 2018. 3. Interpretation of the Term "Duty" in the Context of Section 27A: The respondents contended that since the Court in "Telecare I" held that the amount claimed was not "duty," Section 27A would not apply. The Court clarified that the observation that the amount was not "duty" was being misinterpreted. It meant that the amount was not legally or legitimately claimed as an impost under the Act. The Court emphasized that payments made under a mistaken belief of liability fall within the scope of Section 27A, and the respondents' stand was unjust and legally unsustainable. 4. The Impact of the Supreme Court Judgment in SRF Ltd. on the Refund Claim: The Court noted that the Supreme Court in SRF Ltd. had ruled that import implied a deemed manufacture without any corresponding obligation to avail CENVAT credit. This principle was applied in "Telecare I," leading to the recognition that the excess CVD paid by the petitioner was not legally recoverable. The Court reiterated that the respondents could not resist the refund claim based on the limitation period under Section 27, as the amount was not duty and was recovered mistakenly. 5. The Applicability of the Limitation Period Under Section 27 of the Customs Act, 1962: The respondents argued that the refund claim was time-barred under Section 27 of the Customs Act, 1962. The Court rejected this argument, stating that the original refund application was made within the prescribed period, and the delay in processing the refund was attributable to the respondents. The Court cited precedents where High Courts held that claims for amounts paid under a mistaken notion are not barred by the limitation period under Section 27. Conclusion: The Court allowed the writ petition, holding that the respondents were liable to pay interest from the date of the original refund application on June 24, 2016, until the refund was made on November 29, 2018. The Court also imposed costs of INR 1 lakh on the respondents for their unfair and unjust stand.
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