2018 (9) TMI 1080 - AT - Customs

Tribunal directs interest on refund calculation per statutory provisions

M/s. Adyar Gate Hotel Ltd. Versus The Commissioner of Customs, Chennai IV Commissionerate

The Tribunal allowed the appeal and directed the adjudicating authority to calculate interest on the refund at prescribed rates based on notifications in ... Interest on delayed refund - EPCG Scheme - N/N. 28/97-Cus dated 01.04.1997 - Held that:- Hon’ble High Court of Karnataka in the case of C.C., Airport & ACC. Bangalore Vs. Pfizer Products India P. Ltd. [2015 (9) TMI 34 - KARNATAKA HIGH COURT] while considering a similar issue, has felt it proper to direct the Department to pay an additional interest at the rate of 9% per annum. The appellant is entitled for interest on refund as claimed but however, the same is subject to conditions of Section 27A and the Notifications issued by the Government - adjudicating authority is therefore directed to ascertain such Notifications available till the date of passing the consequential order and compute the interest at the prescribed rates for the period involved in the case on hand - Appeal allowed by way of remand. Issues:Appeal against denial of interest on delayed refund under the EPCG Scheme; Interpretation of Section 27A of the Customs Act for granting interest on refunds; Application of relevant case laws in determining interest rates.Analysis:1. The appellant imported goods under the EPCG Scheme and claimed benefits under Notification No. 28/97-Cus. The matter went through multiple appeals and was finally resolved by the CESTAT in favor of the appellant. Subsequently, the appellant filed a refund claim with interest at 9% per annum based on a Supreme Court decision. The Assistant Commissioner sanctioned a lesser amount, leading to a writ petition and further appeals.2. The Commissioner (Appeals) directed the refund of the full claimed amount but denied the interest at 9% per annum, citing the absence of such a provision in the Customs Act, 1962. The appellant contended that interest should be granted based on Section 27A of the Customs Act and relevant case laws. The issue of interest on delayed refunds was a key point of contention.3. The Tribunal examined Section 27A of the Customs Act, which provides for interest on delayed refunds at rates fixed by the Central Government through notifications. The Tribunal noted the varying rates of interest prescribed by different notifications since 1995. It emphasized that the appellant is entitled to interest on the refund, subject to the conditions of Section 27A and the applicable government notifications.4. Relying on case laws and the provisions of the Customs Act, the Tribunal allowed the appeal and directed the adjudicating authority to calculate the interest on the refund at the prescribed rates based on the notifications in effect at the time of passing the consequential order. The decision highlighted the importance of adhering to statutory provisions and government notifications in determining the interest payable on delayed refunds.5. The judgment clarified the legal framework governing interest on delayed refunds under the Customs Act and underscored the significance of complying with statutory provisions and government notifications in granting such interest. The Tribunal's decision provided clarity on the calculation of interest rates for delayed refunds, ensuring a fair and lawful resolution in the appellant's favor.