2016 (7) TMI 1021 - HC - Customs

Court orders release of interest to petitioner under Customs Act, 1962

The court ruled in favor of the petitioner, directing the release of interest in accordance with Section 27A(1) of the Customs Act, 1962. The court ... Statutory interest on delayed refund - Section 27A of the Customs Act, 1962 - writ of mandamus for payment of money - pari materia provision - Section 11BB of the Central Excise Act, 1944Statutory interest on delayed refund - Section 27A of the Customs Act, 1962 - Entitlement to interest under Section 27A for delayed refund of customs duty - HELD THAT: - The Court held that once a refund application is made and a refund is ordered in favour of the assessee, any delay in payment attracts the statutory interest prescribed by Section 27A(1) of the Customs Act, 1962. The interest provision operates as a deterrent against unjustified retention of sums payable and crystallises from the expiry of three months from receipt of the refund application until actual payment. The Court observed that there was no dispute about the statutory prescription and that the respondents had paid only the principal amount while omitting the interest component for the delayed payment. Reliance on precedents declining writs for mere money claims was distinguished because the demand here is for a statutory interest obligation which has already crystallised upon allowance of the refund.The petitioner is entitled to statutory interest under Section 27A(1) for the period of delay and the respondents must pay the interest so due.Writ of mandamus for payment of money - pari materia provision - Section 11BB of the Central Excise Act, 1944 - Maintainability of writ directing payment of statutory interest (money) and appropriateness of relief by mandamus - HELD THAT: - The Court rejected the preliminary objection that a writ ordering payment of money could not be issued. It held that where a statutory obligation to pay interest has arisen and the amount is crystallised by a refund order, equitable and constitutional relief in the form of writ directing payment is permissible. The Court noted the pari materia treatment of similar interest provisions under Section 11BB of the Central Excise Act, 1944, and prior Division Bench authority that requires timely payment and interest where refunds are delayed. Given the absence of any dispute on entitlement and the existence of a refund order, issuance of appropriate writ relief to secure payment of the interest was warranted.A writ in the nature of mandamus directing payment of the statutory interest is maintainable and should be granted to compel payment.Final Conclusion: The writ petition is allowed; the respondents are directed to pay the interest due under Section 27A(1) of the Customs Act, 1962 for the period of delay and to release the same expeditiously, in any event within twelve weeks from receipt of a copy of this order. Issues:Claim for interest on delayed refund amount under Section 27A of the Customs Act, 1962.Analysis:The petitioner filed a writ petition under Article 226 of the Constitution seeking a writ of mandamus for the grant of interest on a delayed refund amount. The Customs, Excise and Service Tax Appellate Tribunal had allowed the petitioner's appeal and directed a refund of a specific amount. However, the refund was delayed, and the petitioner claimed interest on the delayed payment. The petitioner relied on Section 27A of the Customs Act, 1962, which mandates the payment of interest if the refund is not made within a specified period. The petitioner referred to a Supreme Court judgment in support of their claim.The petitioner made representations and reminders regarding the interest claim, citing the relevant legal provisions. The respondent did not respond adequately to these communications, leading to the filing of the writ petition. During the proceedings, the petitioner presented relevant orders and judgments to support their case, emphasizing the importance of the interest payment under the statutory provision.The respondent argued that a writ petition solely for a money claim was not maintainable, citing legal precedents. However, the court disagreed with this contention, emphasizing that the claim for interest on delayed refund was a statutory entitlement to deter withholding legitimate payments. The court highlighted the importance of timely refund and interest payment as per the law. Referring to a similar provision in the Central Excise Act, the court held that the interest must be paid for the delay in refunding the amount after the application was made and allowed.Ultimately, the court ruled in favor of the petitioner, directing the release of interest in accordance with Section 27A(1) of the Customs Act, 1962. The court ordered the expeditious payment of the interest within a specified timeframe, granting relief to the petitioner in the form of the interest amount claimed. The judgment upheld the statutory provision and the petitioner's right to receive interest on the delayed refund amount, ensuring compliance with the legal requirements.