2016 (7) TMI 1021 - HC - Customs

Seeking interest on delayed refund amount within a time bound period - Held that - Ordinarily, the parties like the petitioner should not be required to make application for refund. Further, there is no lis or adjudication for the duty amount is not payable. The duty is not payable but has been paid already and, then, that sum is required to be refunded, provided all the conditions in that behalf are satisfied. Once there is a refund order, as has been made in the present case in favour of the petitioner and even the implementation thereof is delayed, then, that must carry interest and that is why Section 27A subsection (1) provides for payment of interest. It is now that sum which is directed to be payable. The interest in terms of Section 27A(1) of the Customs Act, 1962 shall be released and the sum paid as expeditiously as possible and within a period of twelve weeks from the date of receipt of a copy of this order. The writ petition is accordingly allowed.

Summary

Issues:
Claim for interest on delayed refund amount under Section 27A of the Customs Act, 1962.

Analysis:
The petitioner filed a writ petition under Article 226 of the Constitution seeking a writ of mandamus for the grant of interest on a delayed refund amount. The Customs, Excise and Service Tax Appellate Tribunal had allowed the petitioner's appeal and directed a refund of a specific amount. However, the refund was delayed, and the petitioner claimed interest on the delayed payment. The petitioner relied on Section 27A of the Customs Act, 1962, which mandates the payment of interest if the refund is not made within a specified period. The petitioner referred to a Supreme Court judgment in support of their claim.

The petitioner made representations and reminders regarding the interest claim, citing the relevant legal provisions. The respondent did not respond adequately to these communications, leading to the filing of the writ petition. During the proceedings, the petitioner presented relevant orders and judgments to support their case, emphasizing the importance of the interest payment under the statutory provision.

The respondent argued that a writ petition solely for a money claim was not maintainable, citing legal precedents. However, the court disagreed with this contention, emphasizing that the claim for interest on delayed refund was a statutory entitlement to deter withholding legitimate payments. The court highlighted the importance of timely refund and interest payment as per the law. Referring to a similar provision in the Central Excise Act, the court held that the interest must be paid for the delay in refunding the amount after the application was made and allowed.

Ultimately, the court ruled in favor of the petitioner, directing the release of interest in accordance with Section 27A(1) of the Customs Act, 1962. The court ordered the expeditious payment of the interest within a specified timeframe, granting relief to the petitioner in the form of the interest amount claimed. The judgment upheld the statutory provision and the petitioner's right to receive interest on the delayed refund amount, ensuring compliance with the legal requirements.