2018 (6) TMI 1308 - AT - Customs

Interest on delayed refund - Refund of SAD - section 27A of the Customs Act - Interest denied on the ground that refund was sanctioned within the time period - Held that - Section 27A of this Act provides for payment of interest if the refund is not made within 3 months from the date of application of refund. There is no amendment to Section 11B of the Central Excise Act which allowed greater latitude to the appellant to file a refund claim will have a bearing on Section 27A of the Customs Act. In fact, Section 11BB of the Central Excise Act as well as Section 27A of the Customs Act are similarly worded and both provide for payment of interest if the refund is not given within three months of an application. It does not matter whether the refund is sanctioned by the Assistant Commissioner himself or on an appeal by the Commissioner (Appeals), Appellate Tribunal or any Court. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim for Special Additional Duty (SAD) on imported timber.
2. Denial of interest on delayed refunds under section 27A of the Customs Act.

Analysis:
1. The appeal was filed against the rejection of a refund claim for Special Additional Duty (SAD) paid on imported timber, which was later sold after cutting into smaller pieces. The claim was initially rejected on the grounds that the sold goods were not the same as the imported ones. However, the appellant obtained a favorable order from the High Court directing the refund to be sanctioned, which was done accordingly.

2. Subsequently, the appellant sought interest on delayed refunds under section 27A of the Customs Act. The original authority denied the interest, stating that the refund was sanctioned within the specified time period. The appellant challenged this denial, arguing that interest liability arises in case of delayed refunds, citing a previous case law (M/s Ranbaxy Laboratories Ltd.) where the Apex Court held that interest is payable after three months from the refund application until the refund is sanctioned.

3. The Commissioner (Appeals) rejected the appellant's request for interest, leading to the current appeal. The appellant referred to a previous decision by the same Bench where interest was allowed in a similar case, emphasizing the settled law that interest is payable in case of delayed refunds. The Bench concurred with this argument, setting aside the impugned order and allowing the appeal with directions to grant interest as per the precedent set by the Apex Court.

4. The Departmental Representative (DR) raised a point regarding the interpretation of Section 11BB of the Central Excise Act, highlighting a potential discrepancy in the application of interest provisions post an amendment in 2007. However, the Bench found no reason to deviate from the earlier decision in favor of the appellant, emphasizing that both Section 11BB of the Central Excise Act and Section 27A of the Customs Act mandate interest payment if refunds are not made within three months of application, irrespective of whether the refund is sanctioned by the original authority or as a result of a higher authority's order.

5. In conclusion, the Bench ruled in favor of the appellant, setting aside the impugned order and allowing the appeal for interest on delayed refunds under section 27A of the Customs Act, in line with the established legal principles and precedents cited during the proceedings.