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Issues: (i) Whether there was delay in sanctioning refund of the Extra Duty Deposit paid on the 42 Bills of Entry; (ii) whether interest was payable on the delayed refund under Section 27A of the Customs Act, 1962; and (iii) if interest was payable, the period for which such interest was payable.
Issue (i): Whether there was delay in sanctioning refund of the Extra Duty Deposit paid on the 42 Bills of Entry.
Analysis: The refund application was filed with the supporting documents and was received by the Customs House on 30.03.2016. The valuation dispute had already been resolved by the SVB order accepting the declared transaction value, and the EDD was a separate deposit collected for the SVB process. The Department's insistence on finalisation of the Bills of Entry before processing the refund did not defeat the claim, because the refund section was required to accept the claim and move the file for priority finalisation where necessary. The delay between receipt of the complete claim and payment of refund was attributable to the Department.
Conclusion: There was delay in sanctioning the refund, against the Revenue.
Issue (ii): Whether interest was payable on the delayed refund under Section 27A of the Customs Act, 1962.
Analysis: Extra Duty Deposit was treated as a separate deposit collected in the course of provisional assessment and SVB inquiry, not as a distinct duty liability, but the statutory scheme governing provisional assessment and refund contemplated payment of interest where refundable amounts were not returned within the prescribed time. The Department could not avoid the interest consequence by relying on pending formal finalisation when the substantive valuation issue had already been decided and the refund claim was otherwise complete.
Conclusion: Interest was payable on the delayed refund, in favour of the assessee.
Issue (iii): If interest was payable, the period for which such interest was payable.
Analysis: Interest became payable after expiry of three months from the date on which the refund claim was received in complete form. The Tribunal held that the relevant period commenced after the statutory three-month window and continued until actual refund payment. On the facts, the period ran from 30.06.2016 to 27.07.2017.
Conclusion: Interest was payable for the period after expiry of three months from receipt of the refund claim till the date of refund, in favour of the assessee.
Final Conclusion: The Department's challenge failed because the refund of Extra Duty Deposit was rightly granted with consequential interest for delayed payment, and the order of the first appellate authority was upheld.
Ratio Decidendi: Where a complete refund claim for Extra Duty Deposit is received and the substantive valuation issue has already been concluded, the Revenue cannot defer refund by insisting on further procedural finalisation, and statutory interest follows once the refundable amount is not paid within three months of receipt of the claim.
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