2012 (9) TMI 424 - HC - Customs

Disallowance of claim for refund Held that - Appellant was liable to refund and the same has been refunded pursuant to the order passed by the CESTAT on 10-1-2001, it is not now open to the appellant to contend that no documents are produced to show that the amount was with the appellant and that the original documents were not produced regarding the amount which was to be refunded and therefore there is delay in making the refund of the amount - respondent would be entitled to interest - appeal of Revenue dismissed

Summary

Issues:
1. Entitlement to interest on belated refund under Section 27A of the Customs Act, 1962.

Analysis:
The High Court of Karnataka heard an appeal by the Revenue challenging the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) order regarding the entitlement to interest on a refund claim. The Tribunal had set aside the original and appellate authority's orders, ruling in favor of the respondent's claim for interest. The respondent's refund claim of Rs. 2,46,606 was initially rejected, but the CESTAT allowed the appeal on 9-4-1999, ordering the refund. However, the refund was not made until 10-1-2001. The respondent then sought interest under Section 27A of the Customs Act. The Assistant Commissioner of Customs rejected the claim, which was upheld in Appeal No. 114/2004. The CESTAT, in Customs 2/2005, held that interest was payable due to the delay in refund after the 1999 order. The High Court considered the arguments presented by both parties and examined the facts on record.

The Court noted that the CESTAT had correctly allowed the respondent's claim for refund, and the refund was delayed until 10-1-2001. Section 27A, introduced by the Amendment Act, 1995, entitled the respondent to interest on the delayed refund. The Court emphasized that the respondent's entitlement to interest was valid from 26-5-1995 to 10-1-2001, as per the Notification issued by the Central Government. The Court found no violation of the Customs Act provisions or regulations in granting interest to the respondent. Therefore, the Court dismissed the appeal, ruling in favor of the respondent.

In conclusion, the High Court upheld the CESTAT's decision, affirming the respondent's entitlement to interest on the belated refund under Section 27A of the Customs Act, 1962. The Court found that the respondent's claim was valid and that interest was payable from the date of the order in 1999 until the refund was made in 2001. The Court rejected the Revenue's appeal, thereby allowing the respondent to receive interest on the delayed refund amount.