Case Note & Summary
The petitioner, M/s Ajay Industrial Corporation Ltd., filed a refund claim for Special Additional Duty (SAD) of Rs.7,40,458/- on 04 August 2014 under notification No. 102/2007-Cus. The respondent, Deputy Commissioner of Customs, rejected the claim on 17 February 2017. The Commissioner (Appeals) allowed the petitioner's appeal and remanded the matter on 30 June 2022. Despite the remand, the respondent delayed disposal, leading the petitioner to file a grievance and eventually a writ petition. On 01 April 2024, the respondent finally allowed the refund but did not award any interest. The petitioner sought interest at 6% per annum under Section 27A of the Customs Act, 1962, claiming a delay of 09 years and 182 days from the initial application. The respondent argued that interest should run only from 08 November 2022, three months after the petitioner's follow-up letter dated 08 August 2022, relying on the Explanation to Section 27A and the Customs Refund Application (Form) Regulations, 1995. The court rejected this contention, holding that the initial application was complete and never found deficient; the follow-up letter was merely a reminder. The Explanation to Section 27A did not apply because the Commissioner (Appeals) only remanded, not ordered refund. The court directed the respondent to pay interest at 6% per annum from 04 September 2014 (three months after the initial application) until the date of refund, within four weeks, with the amount to be calculated and paid accordingly.
Headnote
A) Customs Law - Interest on Delayed Refund - Section 27A Customs Act, 1962 - Interest runs from three months after initial refund application, not from subsequent follow-up application - Petitioner filed refund claim on 04 August 2014; respondent delayed refund until 01 April 2024 after two remands by Commissioner (Appeals) - Court held that interest under Section 27A is payable from 04 September 2014 (three months after initial application) at 6% per annum, rejecting respondent's argument that interest runs only from 08 November 2022 (three months after follow-up letter) - Held that follow-up letter was merely a reminder and not a fresh refund application (Paras 15-22) B) Customs Law - Explanation to Section 27A - Not applicable where Commissioner (Appeals) remands matter - Explanation deems appellate order as refund order only where appellate authority itself orders refund; here Commissioner (Appeals) only remanded, and original authority passed refund order - Held that Explanation does not apply to change starting point for interest calculation (Paras 17-18) C) Customs Law - Customs Refund Application (Form) Regulations, 1995 - Deemed receipt of complete application - Initial application dated 04 August 2014 was never found incomplete or returned; therefore, it is deemed complete and interest runs from three months after that date - Follow-up letter dated 08 August 2022 cannot be treated as a fresh application (Paras 18-20)
Issue of Consideration
Whether interest on delayed refund under Section 27A of the Customs Act, 1962 is payable from three months after the initial refund application dated 04 August 2014 or from three months after a subsequent follow-up application dated 08 August 2022
Final Decision
Writ petition allowed. Respondent directed to pay interest at 6% per annum on the refund amount of Rs.7,40,458/- from 04 September 2014 (three months after initial application) until the date of refund, within four weeks. Rule made absolute.
Law Points
- Interest on delayed refund under Section 27A Customs Act runs from three months after the date of initial refund application
- not from date of subsequent follow-up application
- Explanation to Section 27A does not apply where Commissioner (Appeals) remands matter and original authority passes refund order
- Customs Refund Application (Form) Regulations
- 1995 require acknowledgment of completeness for deemed receipt date
