The Bombay High Court ordered the Deputy Commissioner of Customs to pay interest on a delayed refund of Special Additional Duty (SAD). The petitioner initially applied for a refund in August 2014 which was delayed for nearly 10 years. Despite two remand orders, the customs authorities failed to grant the refund promptly. The Court held that under Section 27A of the Customs Act, 1962, the petitioner was entitled to interest at 6% per annum from August 2014, rejecting the customs authority’s argument to compute interest from a later date.

1. Introduction and Parties Involved:

• Petitioner: M/s Ajay Industrial Corporation Ltd., a company involved in water management products.
• Respondent: Deputy Commissioner of Customs, CRC-I, JNCH, Maharashtra.
• Court: Bombay High Court.
• Judges: M.S. Sonak & Jitendra Jain, JJ.

2. Issue:

The petitioner sought interest on a delayed refund of Rs.7,40,458/- (SAD) under Section 27A of the Customs Act, 1962. Despite favorable orders from the Commissioner (Appeals), the customs authorities delayed processing the refund.

3. Timeline of Events:

• August 4, 2014: Petitioner filed a refund claim.
• February 17, 2017: Refund claim rejected.
• Multiple Appeals: The petitioner secured orders in their favor through Commissioner (Appeals), but the refund was delayed.
• April 1, 2024: Refund granted after nearly 10 years but without interest.

4. Petitioner’s Claim:

The petitioner claimed interest from September 4, 2014 to the refund date in 2024, amounting to Rs. 4,21,940/-.

5. Legal Arguments:

• Petitioner: Entitled to interest under Section 27A of the Customs Act due to delays exceeding three months after the refund application.
• Respondent: Interest should be calculated only from November 2022, based on a subsequent application following an appellate order.

6. Court’s Analysis:

• Section 27A of the Customs Act, 1962 provides for interest on delayed refunds after three months of the application.
• The Court rejected the respondent’s argument, holding that the initial application of August 2014 was valid, and interest must be paid from that date.
• Referencing Ranbaxy Laboratories Ltd. v Union of India and Hamdard (Waqf) Laboratories, the Court underscored that interest is a statutory entitlement for delayed refunds.

Acts and Sections Discussed:

1. Section 27 - Customs Act, 1962: Refund of duty.
2. Section 27A - Customs Act, 1962: Interest on delayed refunds.
3. Relevant Case Laws:
   • Ranbaxy Laboratories Ltd. v Union of India (2011) - Held that interest accrues after three months of filing a refund application.
   • Union of India v Hamdard (Waqf) Laboratories (2016) - Emphasized statutory liability for interest on delayed refunds.

Ratio Decidendi:

The Court reaffirmed that under Section 27A, the petitioner was entitled to interest from three months after the initial refund application in 2014, and the customs authorities could not defer the start date of interest computation based on subsequent administrative actions.

Subjects:

Customs Law, Refund Claims, Delayed Interest.

Refund, Interest, Customs Act, Special Additional Duty, Bombay High Court, Delayed Refunds.