2016 (12) TMI 1208 - AT - Customs

Tribunal grants interest on delayed refund under Customs Act, aligning with Delhi High Court.

The Tribunal ruled in favor of the appellant, holding that they are entitled to interest on delayed refund under Notification No. 102/07-Cus. The decision ... Entitlement to interest on delayed refund of Special Additional Duty (SAD) under Notification No.102/07 Cus - application of the statutory scheme for refunds and interest under Sections 27 and 27A of the Customs Act - ultra vires and invalidity of Board Circular No.6/2008 insofar as it denies interest on delayed refundsEntitlement to interest on delayed refund of Special Additional Duty (SAD) under Notification No.102/07 Cus - application of the statutory scheme for refunds and interest under Sections 27 and 27A of the Customs Act - ultra vires and invalidity of Board Circular No.6/2008 insofar as it denies interest on delayed refunds - Appellant is entitled to interest on delayed sanction of refund of SAD under Notification No.102/07 Cus and Circular No.6/2008 cannot be relied upon to deny such interest. - HELD THAT: - The Tribunal noted authoritative decisions of the High Courts (including the decision of the Hon'ble Delhi High Court in Riso India Pvt. Ltd.) holding that the statutory scheme embodied in Sections 27 and 27A of the Customs Act governs refunds and interest on delayed refunds, and that a collective reading of the relevant provisions applies that scheme to SAD refunds under Notification No.102/07 Cus. Circular No.6/2008, para 4.3, which sought to deny interest on such refunds, was held to be inconsistent with and ultra vires Section 27A. The Tribunal distinguished the line of authorities relied upon by the Revenue as not being directed to refunds under Notification No.102/07 Cus and therefore not applicable. Applying the precedent and reasoning of the High Courts, the Tribunal concluded that interest must be granted on the delayed refund and set aside the impugned orders, allowing the appeal with consequential relief in accordance with law. [Paras 6]Impugned order set aside; appeal allowed and appellant entitled to interest on delayed refund of SAD with consequential relief in accordance with law.Final Conclusion: The appeal is allowed. The appellant is entitled to interest on the delayed sanction of refund of Special Additional Duty under Notification No.102/07 Cus; the impugned orders are set aside and consequential relief shall follow in accordance with law. Issues involved:Whether the appellant is entitled to interest on delayed sanction of refund under Notification No. 102/07-Cus dated 14/9/2007.Analysis:The appeal was filed against an order upholding the rejection of the appellant's appeal for refund. The primary issue was whether the appellant is entitled to interest on delayed refund under Notification No. 102/07-Cus. The Commissioner(Appeals) denied interest based on a Board Circular stating that interest does not arise for such claims. The appellant argued that all refunds under the Customs Act are governed by Section 27, entitling them to interest. They cited judgments from the Madras and Delhi High Courts supporting their claim for interest on delayed refunds.The Revenue, represented by the Assistant Commissioner, contended that special additional duty under Section 3A of the Customs Act does not fall under the refund provisions of Section 27. They relied on various judgments to support their position that interest provisions under Section 27 do not apply to refunds under Notification No. 102/07-Cus. The Tribunal considered the arguments presented by both sides.The Tribunal noted that similar issues were addressed by the High Courts of Madras and Delhi. The Delhi High Court's judgment in a customs appeal case established that Sections 27 and 27A of the Act apply to refunds and interest on delayed refunds, including those under Notification No. 102/07-Cus. The Court found the denial of interest by the Revenue to be inconsistent with the Act, dismissing the appeal and ordering interest on the refunded amount. The Tribunal, following the settled legal position and Delhi High Court's judgment, ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.In conclusion, the judgment clarified that the appellant is entitled to interest on delayed refund under Notification No. 102/07-Cus, aligning with the Delhi High Court's decision and rejecting the Revenue's arguments against granting interest based on previous judgments.