Prospective application of Section 27A: interest on pending customs refund claims becomes payable after the statutory three-month period.

Section 27A of the Customs Act, 1962 was construed to apply prospectively to pending customs refund claims, so interest became payable where a pre-existing refund claim remained unpaid for more than three months after the provision came into force. The interest claim was treated as part of the original refund application, and the communication denying interest was regarded as an appealable order. On that basis, the denial of interest was unsustainable and the order granting interest on the refund was upheld.

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Issues: Whether the respondent was entitled to interest on the customs duty refund under Section 27A of the Customs Act, 1962, including in relation to a refund claim filed before the provision came into force.

Analysis: The claim for refund had been filed prior to the insertion of Section 27A, and the provision was construed to apply prospectively to pending refund claims. The proviso was read as making interest payable where a pre-existing refund claim remained unsettled for more than three months after the provision came into force. The interest claim was also found to have been included in the original refund application, and the communication denying interest was treated as an appealable order.

Conclusion: The respondent was entitled to interest on the refund from the statutory period after Section 27A came into force; the denial of interest was not sustainable.

Final Conclusion: The order granting interest on the refund was upheld and the revenue appeal failed.

Ratio Decidendi: Section 27A of the Customs Act, 1962 applies prospectively to pending refund claims and mandates interest where such claims remain unpaid beyond the prescribed three-month period after its commencement.

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