2023 (3) TMI 652 - HC - Customs

Interest under Section 27A of the Customs Act, 1962 - refunds were made allegedly after delay of more than 90 days of receipt of applications for refund and for which respondents are liable to pay interest under Section 27A of the Customs Act, 1962, according to the petitioner - HELD THAT - The claim of the petitioner under Section 27A of the Customs Act, 1962, for the alleged delayed refunds cannot be granted for the reason that the Section 27A of the aforesaid Act provides the condition that a person is entitled for the refund on receipt of application under Section 27(1) of the Customs Act, and on fulfilling the conditions under Section 27 (1) of the aforesaid Act which in this case is not admitted and is highly disputed as to whether the applications under Section 27 (1) of the Act were made by the petitioner in proper Form and manner as prescribed under the law - On a plain reading of Section 27 (2) of the Customs Act it appears that such application for refund can be allowed on the satisfaction of the Assistant Commissioner of Customs and which according to the respondent Customs authority, in this case, has not been fulfilled which is established from the fact that memos were issued pointing out the deficiencies and the petitioner has responded to those memos of deficiencies in the applications for refund, under the aforesaid Act. Considering all the relevant provisions of Section 27 (1), 27(2), 27A of the Customs Act, 1962, and Regulation 2 along with Explanation under Regulations 2(3) of the Customs Refund Application (Form) Regulations Act, 1995, that the petitioner is not entitled to get interest on the refund on all those applications submitted by the petitioner making claim of refund, where memo of deficiencies were issued and after compliance of such memo of deficiencies refund has been made within the time prescribed under the statute and petitioner will be entitled to get interest only in those cases in which even after responding and compliance to deficiencies of memos and submitting the requisitioned documents, refund has been made by the respondent authorities beyond the time prescribed under the statute. Respondents authorities shall make payment of interest to the petitioner within four weeks from the date of communication of this order if any amount of interest found due after verification from record and after taking into consideration the discussion, observation and law laid down in this judgment. Writ petition disposed off.

Summary

Issues Involved:
1. Entitlement to interest under Section 27A of the Customs Act, 1962, for delayed refunds.
2. Completeness and submission of refund applications as per the Customs Refund Application (Form) Regulations, 1995.
3. Applicability of legal precedents cited by both parties.

Summary:

1. Entitlement to Interest under Section 27A of the Customs Act, 1962:
The petitioner sought interest on delayed refunds under Section 27A of the Customs Act, 1962, claiming that refunds were delayed beyond the statutory period of 90 days. The petitioner argued that the interest provision becomes applicable after 90 days of receipt of the application and that the respondent authorities had no discretion to delay the refunds.

2. Completeness and Submission of Refund Applications:
The respondents contended that most refund applications were incomplete, missing several relevant documents, and that deficiency memos were issued to the petitioner. They argued that the applications could only be treated as complete once all requisite documents were submitted, and refunds were processed within three months from the complete submission of documents. The petitioner disputed this, claiming all applications were complete and that any queries raised were administrative.

3. Applicability of Legal Precedents:
The petitioner relied on several judgments, including Ranbaxy Laboratories Ltd. and Jindal Drugs, to support their claim for interest on delayed refunds. The respondents distinguished these cases factually, arguing that deficiency memos were not issued in those cases, making them inapplicable to the present case. The respondents also cited judgments like Commissioner of Customs, Mangaluru Customs -Vs- JSW Steel Limited, to support their stance that no interest is payable when refunds are sanctioned within the prescribed period after submission of complete applications.

Court's Conclusion:
(i) The claim for interest under Section 27A cannot be granted as the completeness of refund applications is highly disputed.
(ii) Refund applications can only be allowed upon satisfaction of the Assistant Commissioner of Customs, which was not met in this case.
(iii) The court cannot act as an evidence scrutinizing authority to resolve disputed facts about the completeness of applications.
(iv) Refunds were paid within the statutory period after receiving complete applications, thus no interest is due.
(v) Regulation 2(3) with its Explanation indicates that applications are deemed received only when complete, which was disputed by the respondents.
(vi) Interest is only due in cases where no deficiency memos were issued, and refunds were delayed beyond the statutory period.
(vii) The petitioner is not entitled to interest on refunds where deficiency memos were issued and complied with, and refunds were made within the statutory period.
(viii) Respondents are directed to pay interest within four weeks for any amounts due after verification.

The writ petition was disposed of with no order as to costs. Urgent certified photocopies of the judgment were ordered to be supplied upon compliance with requisite formalities.