Section 27A interest on pending customs refunds applied after three months from the relevant date, with no bar on pre-existing claims.

Section 27A of the Customs Act was read to require interest on refunds left unpaid beyond three months from the relevant date, including refund claims already pending when the provision came into force. The Tribunal rejected the argument that the section could not apply to pre-existing refund applications and upheld the view that interest accrued from the period after three months from 1-4-1995 at the rate prescribed in Notification No. 22/95 dated 29-5-95. The departmental challenge therefore failed and interest remained payable on the pending refund claim.

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Issues: Whether interest under section 27A of the Customs Act was payable on a refund claim that was pending on the date the provision came into force, and whether the provision applied to such pending claims from the period after three months from the relevant date.

Analysis: The Tribunal held that the language of section 27A indicated that refunds remaining unpaid beyond three months from the date of assent of the Finance Bill, 1995 would carry interest under the section. It rejected the contention that the provision lacked retrospective effect in relation to refund applications already pending before the commencement date. The Commissioner (Appeals) had therefore correctly directed payment of interest from the period after three months from 1-4-1995 at the rate specified in Notification No. 22/95 dated 29-5-95.

Conclusion: Interest was held payable on the pending refund claim under section 27A of the Customs Act, and the departmental appeal failed.

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