2016 (2) TMI 651 - AT - Customs

Clim of interest on Refund - period of limitatiaon - refund arose on account of finalization of provisional assessment - Held that - refund should be sanctioned within 3 months from the date of assessment of duty finally, and if not done so, then the interest shall be paid till the date of refund of such amount. In the instant case, it is undisputed that provisional assessment was finalized vide letter no. F.No. V Misc(30)23/IOCL/B.E./2005 dated 22.02.2008. Therefore, the appellants are eligible for refund consequent to the said finalization. As the refund is not sanctioned within 3 months from the said date, the appellants are also eligible for interest till the date of refund. - Decided in favor of assessee.

Summary

Issues:
Interest on refund arising from finalization of provisional assessment of duty.

Analysis:
The appellant, a corporation, filed a refund claim of Rs. 21,20,013 arising from the finalization of a provisional assessment of Customs duty. The claim was initially rejected as time-barred since it was not filed within six months from the date of provisional assessment. The appellant contended that the refund was not time-barred as it arose from the finalization of provisional assessment. The CESTAT, Ahmedabad, upheld the appellant's contention, allowing the appeal with consequential relief. The appellant requested the adjudicating authority to process the refund in line with the CESTAT order. However, the authority did not grant interest on the refunded amount, citing timely sanctioning within three months of the CESTAT order. The Commissioner (Appeals) upheld this decision.

The appellant argued that interest should be paid as per Section 18(2)(4) of the Customs Act, 1962, if the refund is not processed within three months from the date of final assessment. The appellant relied on relevant case law to support their claim. The Revenue representative contended that the three-month period should be calculated from the date of the Tribunal order, not the final assessment date, and that the appellant did not initially claim interest in the litigation.

The appellant highlighted that the CESTAT's earlier order allowed the appeal with consequential relief, making it unnecessary for a remand order. The issue at hand revolved around the interest on the refund arising from the finalization of provisional assessment of duty. Referring to Section 18(2)(4) of the Customs Act, 1962, the Tribunal noted that interest should be paid if the refund is not sanctioned within three months from the final assessment date. As the refund was not processed within the stipulated period in this case, the appellant was entitled to interest until the refund date. The Tribunal cited precedent cases to support its decision, emphasizing that interest accrues automatically upon refund, irrespective of the claimant's request.

In conclusion, the Tribunal set aside the impugned order-in-appeal, allowing the appeal with consequential relief. The decision was based on statutory provisions and legal precedents mandating the payment of interest on delayed refunds.