Case Note & Summary
The appeal was filed by the Commissioner of Customs, Bangalore, against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 21.05.2014, which allowed the appeal of the respondent-company, M/s Pfizer Products India Pvt. Ltd., regarding payment of interest under Section 27A of the Customs Act, 1962. The respondent had imported goods on 04.06.1998 and paid customs duty of Rs.1,06,74,049/-, but later realized the goods were exempt under a notification dated 02.06.1998. They filed a refund claim on 24.12.1998 under Section 27 of the Act. The Deputy Commissioner rejected the claim on 23.10.2001, but the Commissioner (Appeals) on 16.10.2002 held the respondent eligible for exemption but directed the refund amount to be credited to the Consumer Welfare Fund on grounds of unjust enrichment. The Tribunal on 27.07.2005 allowed the appeal, holding the refund not hit by unjust enrichment. The Revenue's appeal to the High Court was dismissed on 01.04.2010, and an SLP was filed before the Supreme Court. Meanwhile, the respondent filed an application for interest under Section 27A, which was rejected by the Deputy Commissioner. The Commissioner (Appeals) allowed the interest claim, and the Tribunal upheld it. The Revenue then filed the present appeal. The High Court framed the issue of whether interest is payable from the date of payment of duty or from the date of claim. The court held that under Section 27A, interest is payable from the date of payment of duty till the date of refund, as the language is clear. The court rejected the Revenue's argument that unjust enrichment bars interest, stating that the doctrine applies only to the refund of duty, not to interest. The court also noted that the refund claim was filed within limitation. Consequently, the appeal was dismissed, affirming the Tribunal's order granting interest from the date of payment of duty.
Headnote
A) Customs Law - Interest on Refund - Section 27A Customs Act, 1962 - Entitlement to Interest - The issue was whether interest under Section 27A is payable from the date of payment of duty or from the date of claim. The court held that interest is payable from the date of payment of duty, as the section provides for interest from the date of payment of duty till the date of refund. The court relied on the plain language of Section 27A and the principle that interest is compensatory in nature. (Paras 1-5)
B) Customs Law - Unjust Enrichment - Section 27 Customs Act, 1962 - Applicability to Interest - The Revenue argued that since the refund was directed to be credited to the Consumer Welfare Fund on grounds of unjust enrichment, no interest was payable. The court held that the doctrine of unjust enrichment applies only to the refund of duty, not to interest, which is a separate statutory entitlement. (Paras 4-5)
C) Customs Law - Limitation - Section 27A Customs Act, 1962 - Period for Filing Claim - The court noted that the refund claim was filed within the limitation period under Section 27, and thus the respondent was entitled to interest from the date of payment of duty. (Paras 2-3)
Issue of Consideration
Whether the respondent-company is entitled to interest under Section 27A of the Customs Act, 1962 on the refund of customs duty from the date of payment of duty or from the date of filing of the refund claim
Final Decision
The High Court dismissed the appeal, affirming the CESTAT order that the respondent is entitled to interest under Section 27A of the Customs Act, 1962 from the date of payment of duty (04.06.1998) till the date of refund.
Law Points
- Interest on refund of customs duty is payable from the date of payment of duty
- not from the date of claim
- under Section 27A of the Customs Act
- 1962
- Unjust enrichment does not bar interest claim if refund itself is not barred
- Doctrine of unjust enrichment applies to refund of duty
- not to interest
Case Details
2015 LawText (KAR) (08) 9
C Shashikantha (for appellant), Ganapati Hegde, R.G.Sheth (for respondent)
The Commissioner of Customs, Air Port and Air Cargo Complex, C.R.Buildings, Queens Road, Bangalore-560001
M/s Pfizer Products India Pvt. Ltd., Pfizer Centre, Patel Estate, S.V.Road, Jogeshwari (W), Mumbai-401102
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Nature of Litigation
Appeal by Revenue against CESTAT order allowing interest on refund of customs duty under Section 27A of the Customs Act, 1962
Remedy Sought
Revenue sought to set aside the CESTAT order granting interest on refund from the date of payment of duty
Filing Reason
Revenue challenged the Tribunal's order that interest under Section 27A is payable from the date of payment of duty, arguing that interest should be from the date of claim and that unjust enrichment bars interest
Previous Decisions
Deputy Commissioner rejected refund claim on 23.10.2001; Commissioner (Appeals) on 16.10.2002 allowed exemption but directed refund to Consumer Welfare Fund on unjust enrichment; Tribunal on 27.07.2005 allowed refund without unjust enrichment; High Court dismissed Revenue's appeal on 01.04.2010; SLP filed before Supreme Court; Deputy Commissioner rejected interest claim; Commissioner (Appeals) allowed interest; Tribunal upheld interest order
Issues
Whether interest under Section 27A of the Customs Act, 1962 is payable from the date of payment of duty or from the date of filing of the refund claim
Whether the doctrine of unjust enrichment applies to interest on refund of customs duty
Submissions/Arguments
Revenue argued that interest under Section 27A is payable only from the date of claim, not from the date of payment of duty, and that since the refund was directed to be credited to the Consumer Welfare Fund on grounds of unjust enrichment, no interest is payable
Respondent argued that Section 27A clearly provides for interest from the date of payment of duty till the date of refund, and unjust enrichment does not apply to interest
Ratio Decidendi
Under Section 27A of the Customs Act, 1962, interest on refund of customs duty is payable from the date of payment of duty till the date of refund. The doctrine of unjust enrichment applies only to the refund of duty, not to interest, which is a separate statutory entitlement. The plain language of Section 27A mandates interest from the date of payment of duty.
Judgment Excerpts
The issue involved in this appeal is as to whether the respondent-company is entitled to interest under Section 27A of the Customs Act, 1962 from the date of payment of duty or from the date of filing of the claim.
A perusal of Section 27A of the Act clearly provides that where any duty is ordered to be refunded to the applicant, there shall be paid to the applicant interest on such duty from the date of payment of duty till the date of refund.
The doctrine of unjust enrichment would apply only to the refund of duty and not to the interest, which is a separate statutory entitlement.
Procedural History
The respondent imported goods on 04.06.1998 and paid customs duty. On 24.12.1998, they filed a refund claim under Section 27 of the Customs Act, 1962. The Deputy Commissioner rejected the claim on 23.10.2001. The Commissioner (Appeals) on 16.10.2002 allowed the exemption but directed the refund to the Consumer Welfare Fund on unjust enrichment. The Tribunal on 27.07.2005 allowed the appeal, holding no unjust enrichment. The Revenue's appeal to the High Court was dismissed on 01.04.2010. An SLP was filed before the Supreme Court. Meanwhile, the respondent filed an application for interest under Section 27A, which was rejected by the Deputy Commissioner. The Commissioner (Appeals) allowed the interest claim. The Tribunal upheld the interest order on 21.05.2014. The Revenue filed the present appeal under Section 130 of the Customs Act before the High Court, which was dismissed on 13.08.2015.
Acts & Sections
- Customs Act, 1962: 27, 27A
