2013 (8) TMI 355 - AT - Customs

Interest on delayed refund Refund of duty assessee filed an appeal for refund of duty supreme court granted the refund in favour of assessee. - Against the refund granted the assessee made claim of interest department denied the same assessee contended that refund arose u/s 18 was governed by Section 27 - Revenue denies on the contention that ground that Section 18 (2) entitles to refund if any arises out of finalisation of provisional assessment automatically whereas refund u/s 27 was a claim without a suo motu grant Held that - Delay in granting refund having been made even after 18.7.2006 till 13.7.2007 assessee was entitled to interest on the refund from interest u/s 18(4) but before 13.7.2006 was time barred - suo motu refund was a grant of section 18(2) whereas claim of refund was envisaged by section 27 an assessee assumes right to refund u/s18(2) - section 27 determines a right to refund upon claim court followed Commissioner of Customs Vs. Indian Oil Corporation (2012 (1) TMI 31 - DELHI HIGH COURT) sub-sections (3), (4) and (5) introduced to section 18 of Customs Act, 1962 have no retrospective effect - Thus right to interest under Section 18(4) of Customs Act, 1962 before 13.7.2006 is accordingly barred. However delay in granting refund having been made even after 18.7.2006 till 13.7.2007, appellant is entitled to interest on the refund from 13.7.2006 to 13.7.2007 only. - decided in favour of assessee.

Summary

Issues:
1. Claim of interest on refund arising from finalization of provisional assessment.
2. Applicability of Section 27 and Section 18 of the Customs Act, 1962 to the refund claim.
3. Entitlement to interest on refund prior to 13.7.2006.

Analysis:
1. The case involved a dispute regarding the appellant's claim for interest on a refund arising from the finalization of provisional assessment. The refund application was initially rejected on the grounds of unjust enrichment but was later granted following a successful appeal to the Apex Court. The main contention was whether interest was payable on the refund amount.

2. The Tribunal analyzed the provisions of Section 27 and Section 18 of the Customs Act, 1962 in relation to the nature of the refund. It was established that refund under Section 18(2) arises automatically upon finalization of provisional assessment, while refund under Section 27 requires a specific claim. The Tribunal concluded that the appellant's right to refund under Section 18(2) did not automatically entitle them to interest prior to 13.7.2006.

3. The Tribunal considered the introduction of subsection (4) to Section 18 from 13.7.2006, which provided for payment of interest in case of delay in refund. It was noted that this amendment was substantive and not retrospective. Therefore, the appellant was not entitled to interest on the refund amount before 13.7.2006. However, the Tribunal ruled that the appellant was entitled to interest on the refund from 13.7.2006 to 13.7.2007, as there was a delay in granting the refund during that period.

In conclusion, the Tribunal partially allowed the appeal, stating that the appellant was entitled to interest on the refund amount only from 13.7.2006 to 13.7.2007, based on the provisions of the Customs Act, 1962 and relevant legal precedents cited during the proceedings.