2017 (9) TMI 400 - AT - Customs

Interest on delayed refunds - the original order of assessment was passed as early as 6/1/1995. The refund claim of the respondent was originally made before the authorities on 7/10/1996 - The adjudication of the dispute has a checkered history - Held that - The question of payment of interest by revenue authorities for delayed payment of interest has come up before the Hon ble Supreme Court in the case of Ranbaxy Laboratories Ltd. 2011 (10) TMI 16 - Supreme Court of India , where it was held that liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. Interest allowed - appeal dismissed - decided against Revenue.

Summary

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

Analysis:
The case involved a dispute where the respondent imported fertilizer and claimed clearance at a nil rate of duty under Customs Tariff Heading 3105.59. However, the customs department classified it under Customs Tariff Heading 2834.21, imposing customs duty. The respondent paid the duty under protest and later filed a claim for a refund. Upon receiving the principal refund amount, the respondent claimed interest on the refund amount due to the delay in payment. The Commissioner (Appeal) sanctioned the interest payment in line with Section 27A of the Customs Act, 1962, leading to the Revenue filing an appeal against this decision.

During the proceedings, the department argued that the respondent did not claim interest along with the refund application and only made the claim after receiving the principal refund amount. They cited a decision of the Delhi High Court to support their position. On the other hand, the respondent contended that interest should be payable for any refund delayed beyond three months from the receipt of the application, referencing a Supreme Court decision in Ranbaxy Laboratories Ltd. vs. Union of India.

The Tribunal noted the history of the case, highlighting the long-standing dispute and multiple appeals before finally sanctioning the refund of the customs duty. The main issue under consideration was the claim for interest made by the respondent after receiving the principal refund amount. The Tribunal referred to Section 27A of the Customs Act, which provides for interest on delayed refunds, and cited the Supreme Court's interpretation that interest liability starts after three months from the receipt of the refund application.

While the Revenue relied on a Delhi High Court decision, the Tribunal found it inapplicable to the present case as the refund was paid within the stipulated three-month period. Ultimately, the Tribunal upheld the Commissioner (Appeal)'s decision to grant interest on the delayed refund payment, aligning with the Supreme Court's interpretation of the relevant provisions. Consequently, the appeal filed by the Revenue was dismissed, affirming the payment of interest on the delayed refund amount as per Section 27A of the Customs Act, 1962.