2013 (11) TMI 995 - AT - Customs

Interest on Refund - Commencement of liability of revenue to pay Interest - expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made - interest against the provisions of Section 27A read with section 27 of the Customs Act, 1962 - Held that - liability of the revenue to pay interest commences from the date of expiry of three months from the date of receipt of application for refund and not on the expiry of the said period from the date on which order of refund is made - Following decision of Ranbaxy Laboratories Ltd. Versus Union Of India and Ors. 2011 (10) TMI 16 - Supreme Court of India - Decided against Revenue.

Summary

Issues:
- Interpretation of Section 27A of the Customs Act, 1962 regarding interest on delayed refunds.
- Comparison with Section 11BB of the Central Excise Act, 1944 for determining the date from which interest becomes payable.

Analysis:

Issue 1: Interpretation of Section 27A of the Customs Act, 1962
The appeal was filed by the Revenue against the order of the Commissioner(Appeals) directing payment of interest for delayed refund. The argument put forth was that the Commissioner's decision to pay interest was against the provisions of Section 27A read with section 27 of the Customs Act, 1962. The explanation to section 27A clarifies that an order of refund passed by the CESTAT against the order of the Assistant Deputy Commissioner of Customs is deemed to be an order for the purpose of payment of refund under Section 27(2) of the Customs Act, 1962. Therefore, interest is payable with reference to the date of the CESTAT order, and as per Section 27A, interest becomes payable three months after the date of the CESTAT Order.

Issue 2: Comparison with Section 11BB of the Central Excise Act, 1944
The appellant cited the case of Ranbaxy Laboratories Ltd. vs. Union of India to argue that interest on delayed refund is payable under Section 11BB of the Central Excise Act, 1944 from the expiry of three months from the date of receipt of the application under Section 11B, not from the date of the order of refund or Appellate Order allowing such refund. The Tribunal followed the Supreme Court's interpretation that interest under Section 11BB becomes payable on the expiry of three months from the date of receipt of the application under sub-section 1 of Section 11B of the Act. This interpretation was also supported by the Tribunal in the case of R.K.Chemicals vs. CC(Import), Mumbai and the High Court of Andhra Pradesh in the case of CC & CE, Hyderabad-III vs. Ampro Industries Pvt.Ltd. Based on this, the Tribunal rejected the Revenue's appeal and disposed of the Cross Objection filed by the respondent Assessee.

In conclusion, the Tribunal upheld the payment of interest for delayed refund as per the provisions of Section 27A of the Customs Act, 1962 and the interpretation provided by the Supreme Court regarding the payment of interest under Section 11BB of the Central Excise Act, 1944.