2019 (10) TMI 700 - HC - Customs

Interest on delayed refund - scope of 'duty' and 'deposit' - refund was rejected on the reason that no appeal was filed against the assessment order - whether the amount collected from the petitioner is a duty or deposit ? - HELD THAT - No doubt, both 'duty' and 'deposit' are in the hands of the Revenue. At the same time, it is to be noted that right to credit or forfeit such deposit would arise only after determination of the liability to pay the 'duty'. On the other hand, the right over the duty so paid is instant on the revenue and not a postponed entitlement - Therefore, an amount so determined as 'duty' by processing the Bill of Entry and collected by the Revenue can never be termed as a deposit , even assuming that such collection, later, is found to be either unlawful or excessive - the claim of the Revenue that the amount collected was only a deposit and not duty , is factually incorrect and thus liable to be rejected. Whether the petitioner is entitled for interest on the amount refunded? - HELD THAT - Liability to refund begins when it actually due and not when it is actually determined. At this juncture, it is worth to note that while adjudicating the duty liability, the Adjudicating Authority also imposes interest and penalty on such duty liability. It is not that duty alone is collected from the importer from the date of adjudication and on the other hand, such liability to pay duty is fastened on such importer from the date when it becomes due. Therefore, the Revenue collects the interest on such belated payment of duty and also penalty for not paying the same at the appropriate time. The same analogy is to be applied in the case of refund as well, while considering the payment of interest. Section 27A of the Customs Act was carefully coined for payment of such interest from the expiry of three months of the date of the application and not from the date of the order. The order of the respondent, impugned in this writ petition, cannot be sustained - Petition allowed - the respondent is directed to pay interest with permissible percentage under law, from the date of expiry of three months from the date of receipt of the refund application dated 20.09.2012.

Summary

Issues Involved:
1. Maintainability of the writ petition.
2. Classification of the amount collected as "duty" or "deposit."
3. Entitlement of the petitioner to interest on the refunded amount.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The court considered whether the writ petition was maintainable despite the availability of an alternative statutory appellate remedy. It was determined that the writ petition was maintainable because the issue at hand required interpretation of Section 27A of the Customs Act, 1962, and involved no factual disputes. The court emphasized that the availability of an alternative remedy does not bar the exercise of jurisdiction under Article 226 of the Constitution of India, especially when the facts are undisputed and the issue pertains to the interpretation of law.

2. Classification of the Amount Collected as "Duty" or "Deposit":
The court examined whether the amount collected from the petitioner was a "duty" or a "deposit." The petitioner argued that the amount was collected as Countervailing Duty (CVD) under a Bill of Entry and not as a deposit. The court noted that the Bill of Entry clearly indicated the amount as duty, and the Appellate Authority had set aside the assessment order, confirming that the duty was collected without authority of law. The court held that the amount collected was indeed "duty" and not a "deposit," rejecting the respondent's claim that it was a deposit to avoid paying interest under Section 27A of the Customs Act.

3. Entitlement of the Petitioner to Interest on the Refunded Amount:
The court addressed whether the petitioner was entitled to interest on the refunded amount. Section 27A of the Customs Act, 1962, mandates the payment of interest on delayed refunds from the date immediately after the expiry of three months from the date of receipt of the refund application. The court referred to the Supreme Court's decision in Ranbaxy Laboratories Ltd. vs. Union of India, which clarified that interest becomes payable from the date of expiry of three months from the date of receipt of the refund application, not from the date of the refund order. The court concluded that the petitioner was entitled to interest from the date of expiry of three months from the date of their refund application, which was 20.09.2012. The court directed the respondent to pay the interest within four weeks from the date of receipt of the order.

Conclusion:
The writ petition was allowed, and the impugned order rejecting the interest claim was set aside. The court directed the respondent to pay interest on the refunded amount from the date of expiry of three months from the date of receipt of the refund application, in accordance with Section 27A of the Customs Act, 1962. No costs were imposed.