Court Orders Interest Payment on Delayed Refund Under Customs Act

The Court directed the respondents to pay interest on the refunded amount for a delay of over two months, in accordance with Section 27-A of the Customs Act, 1962. The interest was set at a rate of 9% for a period of two months, to be paid within one month from the date of receiving the order copy.

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Issues involved:
Seeking refund of custom duty with interest u/s 27-A of the Customs Act, 1962.

Judgment Summary:

The petitioner filed a petition to direct the respondents to refund the amount of Rs. 14.70 lacs with interest from 3-4-2003. The petitioner was arrested under Section 104 of the Customs Act for alleged violations of Section 135. After being granted bail, a show cause notice was issued claiming duty of Rs. 14.70 lacs, which was confirmed by the Commissionerate of Customs. However, the demand was set aside by the Appellate Authority. The petitioners applied for a refund following the Appellate Authority's order, as they did not receive any response. The respondents later stated that the refund had already been granted.

The petitioner claimed interest u/s 27-A of the Act on the refunded amount, as the refund was received after a significant delay. The liability to pay interest arises after three months from the date of application. The application was made on 2-2-2006, and the refund was issued on 18-7-2006, causing a delay of over two months. The respondents argued that the application was moved to a different location and lacked evidence of payment, but the Court found that the department had ample time for verification as per statutory requirements.

Considering the delay and the statutory provisions of Section 27-A, the Court allowed the petition and directed the respondents to pay interest on the refunded amount for a period of two months at a rate of 9%. The respondents were instructed to make this payment within one month from the date of receipt of the order copy. The writ petition was disposed of accordingly.

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