2024 (12) TMI 1473 - AT - Customs

Entitlement to claim interest under section 27A of the Customs Act, 1962 from the date of sanction of the refund or from the date of actual refund - HELD THAT - Section 27A of the Customs Act clearly provides for payment interest up to the date of refund. The order of the Commissioner (Appeals) granting refund has, therefore, to be read in the light of the provisions of section 27A of the Customs Act. What has also to be noted is that the Commissioner (Appeals), in the operative part of the order, also directed that the payable interest should be granted to the appellant. Conclusion - There is, therefore, no reason as to why the appellant would not be entitled to claim interest up to the date of refund of the amount. The matters are remanded to adjudicating authority to calculate and make the payment of the additional amount of interest in accordance with the observations made above within a period of two months from the date a copy of this order is produced before the adjudicating authority - Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal question in this judgment is whether the appellant is entitled to claim interest under section 27A of the Customs Act from the date of sanction of the refund or from the date of actual refund.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents:

Section 27A of the Customs Act provides for interest on delayed refunds. It stipulates that if any duty ordered to be refunded under section 27(2) of the Customs Act is not refunded within three months from the date of receipt of the application, interest shall be paid to the appellant from the expiry of three months from the date of receipt of the application until the date of refund of such duty.

Court's Interpretation and Reasoning:

The court interpreted section 27A of the Customs Act as clearly providing for the payment of interest up to the date of refund. The court noted that the Commissioner (Appeals), in the operative part of the order, directed that "payable interest" should be granted to the appellant. This interpretation aligns with the statutory provision, which mandates interest until the actual refund date.

Key Evidence and Findings:

The evidence considered involved the procedural history of the refund claims, including the initial orders of the adjudicating authority and the subsequent appeals. The findings highlighted that the appellant was granted interest only up to the date of sanction, contrary to the statutory mandate of section 27A.

Application of Law to Facts:

The court applied the statutory provision of section 27A to the facts, concluding that the appellant is entitled to interest up to the date of the actual refund. The court emphasized that the statutory language is clear and that the appellant should receive interest for the entire period of delay.

Treatment of Competing Arguments:

The appellant argued that interest should be calculated up to the date of refund, while the department contended that interest should only be up to the date of sanction, as per the earlier order. The court rejected the department's argument, noting that the statutory provision overrides the earlier order's interpretation.

Conclusions:

The court concluded that the appellant is entitled to interest up to the date of refund, as per section 27A of the Customs Act. The matter was remitted to the adjudicating authority to compute the interest amount payable to the appellant, ensuring compliance with the statutory mandate.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"Section 27A of the Customs Act clearly provides for payment interest up to the date of refund."

Core Principles Established:

The judgment establishes the principle that statutory provisions regarding interest on delayed refunds must be strictly adhered to, ensuring that interest is calculated up to the date of actual refund, not merely the date of sanction.

Final Determinations on Each Issue:

The court set aside the order dated 25.08.2022 passed by the Commissioner (Appeals) in all thirteen appeals. The matters were remanded to the adjudicating authority to calculate and make the payment of the additional amount of interest in accordance with the court's observations, within a period of two months from the date a copy of this order is produced before the adjudicating authority. All thirteen appeals were allowed.

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