MSG Enterprises vs Commissioner of Customs - (Customs, Excise and Service Tax Appellate Tribunal) (25 May 2022)

Statute provides for mandatory payment of interest and there is no discretionary power with the Revenue Authority in the matter of interest

MANU/CE/0193/2022

Customs

The issue involved in present appeal is whether the Commissioner (Appeals) has rightly rejected the claim of interest, on the grant of belated refunds, by referring to the limitation under Section 128 of the Customs Act, 1962.

The Appellant is an importer, who imported fabrics. At the time of import, the goods were assessed at a higher value than the declared value by the proper officer. Although, the Appellant did not agree with the enhancement, however, they paid the duty for taking clearance and filed appeal before the Commissioner of Customs (Appeals). On being successful in the appeal before the Commissioner (Appeals), the Appellant applied for refund of the excess duty paid.

As the Appellant have paid duty at the time of importation, it is entitled to refund of such excess duty. Further, placing reliance on the ruling of this Tribunal, in the case of Commissioner of Customs & Excise Vs. M/s. Artex Textile Pvt. Ltd., learned Commissioner directed refund of the amount in cash. However, as regards the claim of interest as per provisions of Section 27 A, the same was rejected, observing that the original order of refund had been issued on 30th September, 2020/6th June, 2019, whereas the appeal for interest has been filed in December, 2019 and the same is hit by limitation under Section 128 of the Customs Act.

Section 27 A of Customs Act, provides that, " where a refund is not granted within three months from the date of receipt of the application, that shall be paid to the applicant with interest at such rate, as notified, on such duty, from the date immediately after the expiry of three months, from the date of receipt of such application, till the date of refund of such duty. Thus, the statute provides for mandatory payment of interest, and there is no discretionary power with the Revenue Authority in the matter of interest.

Learned Commissioner (Appeals) has mis-conceived the issue of interest by rejecting the same by referring to the provisions of Section 128 of the Customs Act. The Appellant is entitled to interest from the end of three months from the date of refund application before the Adjudicating Authority, till the date of grant of refund in cash. The Adjudicating Authority is directed to disburse the interest within a period of 45 days from the date of receipt/service of copy of this order. Appeal is allowed.

Tags : REFUND INTEREST ENTITLEMENT