2020 (4) TMI 281 - HC - Customs

Interest on Delayed Refund of SAD - section 27 of CA - petitioners have made claim for refund and if the same was sanctioned after huge delay of 7 years - HELD THAT - If any duty is ordered to be refunded under sub-section (2) of section 27 to an applicant and it is not refunded within three months from the date of receipt of application under sub-section(1), interest is required to be paid to the applicant as may be notified by the Central Government in the Official Gazette. It has been consistently 6% which has been notified by the Central Government - it is also noticed that after receiving that refund amount which is aggregating a sum of ₹ 6,31,811/- and ₹ 18,62,355/- respectively the petitioners had communicated to the respondent authorities and made request for 6% of interest which, upon calculation, comes to ₹ 3,40,321. There are no other ground except the unclarity of the authority in processing the refund claim. This interdepartmental lack of clarity can hardly effect the right of the parties particularly when there is statutory provision permitting the interest on the refund claim, if the sum is not paid within stipulated time period of 3 months - respondent No.2 is directed to revise and modify the orders dated 19.3.2019, 5.4.2019 and 10.4.2019 also calculate and process statutory interest as to be paid under Section 27-A of the Customs Act and pay to the petitioners within four weeks from the date of receipt of certified copy of present order - petition disposed off.

Summary

Issues:
Refund of Special Additional Duty (SAD) on imported goods, entitlement to interest on delayed refund under Section 27-A of the Customs Act.

Analysis:
1. Refund of SAD: The petitioners, engaged in the trading of used clothes, imported goods liable for customs duties and additional custom duties. They purchased goods from a Special Economic Zone (SEZ) and were entitled to a refund of 4% SAD under Notification No. 102/2007 if the goods were imported for subsequent sale. The petitioners filed refund applications as the SAD was charged for counterbalancing sales tax, VAT, etc., upon subsequent sale in India.

2. Delay in Refund: The refund applications were not decided promptly by the customs authorities, leading to delays. The petitioners moved the court through Special Civil Applications seeking the revision and modification of orders to include the statutory interest on the refunded amounts. The court directed the authorities to decide on the refund claims within a specified period.

3. Entitlement to Interest: Section 27-A of the Customs Act provides for interest on delayed refunds. The petitioners were entitled to interest on the refunded amounts due to the significant delay in processing their refund claims. The court emphasized that the entitlement to interest under the Customs Act could not be denied, especially when the refund was issued after a substantial delay of over seven years.

4. Court's Decision: The court, after considering the submissions from both sides, directed the authorities to revise and modify the refund orders to include the statutory interest as per Section 27-A of the Customs Act. The respondents were instructed to calculate and process the interest amount promptly and pay it to the petitioners within a specified timeframe. The court highlighted the importance of adhering to statutory provisions regarding interest on delayed refunds, ensuring that the petitioners receive their rightful entitlement without further delay.

5. Conclusion: The court's judgment focused on upholding the petitioners' right to interest on delayed refunds as stipulated under the Customs Act. By directing the authorities to include the statutory interest in the refund amounts and process the payments promptly, the court ensured that the petitioners received fair compensation for the delays in refund processing. The decision underscored the significance of adhering to legal provisions to protect the rights of individuals and businesses in matters concerning customs duties and refunds.