2019 (6) TMI 1248 - AT - Customs

Interest on delayed refund - time limitation for Refund of Special Excise Duty and on account of excess payment of CVD - N/N. 9/2006 dated 01.03.2006 - Section 27 of Customs Act - HELD THAT - The refund claim was filed as back as 31.07.2012 and the subsequent application of refund dated 11.08.2014 was nothing but the continuation of the said previous application itself. The interest has been denied relying upon Section 27 (1B) (c) of Customs Act, 1962. Perusal of Section 27 makes it clear that the period of limitation of one year is for the person claiming refund - In the present case the application dated 31.07.2012 is within one year of the last Bill of Entry among 13 i.e. dated 05.01.2012. Even first Bill of entry dated 18.08.2011 fulfills the aforesaid limitation as applicable to the appellant. Section 27 (1B) prescribes the mode of computing the aforesaid period of limitation of one year. Thus, Sub-clause (c) thereof gives the extended time to the appellant and not to the Department. Section 27 (a) of the Customs Act says that if any duty ordered to be refunded under Sub-Section (2) of Section 27 to the applicant is not refunded within 3 months from the date of receipt of application under sub-section (1) of Section 27 they shall be paid to the applicant the interest at such rate as is mentioned in the said Section - the application for refund was filed on 31st July, 2012, another application in continuation thereof was filed on 11.08.2014. Reassessment was on 24.11.2015. Apparently, and admittedly, the amount of refund has been sanctioned but has not been refunded within 3 months from the date of receipt of the above mentioned application, Section 27 (a) being a statutory mandate upon the Department, the Department is liable to pay the interest on the sanctioned amount for the delayed period. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Delay in sanctioning refund claim and entitlement to interest.
2. Rejection of interest based on statutory mandate of Customs Act, 1962.
3. Interpretation of Sections 27 and 27(1B)(c) of the Customs Act, 1962.

Analysis:
1. Delay in Sanctioning Refund Claim and Entitlement to Interest:
The appellant, engaged in importing ATVs and spare parts, filed a refund claim against 13 Bills of Entries provisionally assessed during August 2011 to January 2012. The claim was partially allowed but rejected for excess CVD. After a remand, a fresh refund claim was filed and sanctioned in 2016 without interest. The appellant argued for interest citing intentional delay by the Department. The Tribunal noted the delay in sanctioning the claim and relied on legal precedents to support the appellant's entitlement to interest, ultimately setting aside the rejection of interest and allowing the appeal.

2. Rejection of Interest Based on Statutory Mandate:
The Department rejected the interest claim based on Section 27(1B)(c) of the Customs Act, 1962, stating that the refund was sanctioned within three months of reassessment. The Department argued that the appellant was not entitled to interest as per the statutory mandate. However, the Tribunal disagreed, emphasizing the delay in sanctioning the refund claim and the appellant's diligent compliance, leading to the conclusion that the Department was liable to pay interest on the sanctioned amount for the delayed period.

3. Interpretation of Sections 27 and 27(1B)(c) of the Customs Act, 1962:
The Tribunal analyzed Section 27 of the Customs Act, which governs refund claims, and Section 27(1B)(c) related to the computation of the limitation period for refund claims. It clarified that the limitation period of one year is for the claimant, and in this case, the appellant's refund application was within the prescribed time frame. The Tribunal highlighted that the Department was not entitled to benefit from Section 27(1B)(c) as the appellant's initial refund application covered both SED and CVD, and no fresh application was filed post-reassessment. The Tribunal also referenced Section 27(a) regarding interest payment if refunds are delayed, concluding that the Department was liable to pay interest due to delayed refund disbursement.

In conclusion, the Tribunal set aside the original order, allowing the appeal and ruling in favor of the appellant's entitlement to interest on the sanctioned refund amount.