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Cus - Delay in sanction of refund of SAD in terms of Notfn 102/2007 - Appellant entitled to receive interest: CESTAT

By TIOL News Service

MUMBAI, JUNE 08, 2016: THE issue involved is whether the appellant is entitled for interest on delayed sanction of refund of SAD under Notification No. 102/07-Cus dated 14/9/2007.

The Commissioner (Appeals) denied the interest by referring to paragraph 4.3 of the Board Circular No. 6/2008 dated 28/4/2008 which reads -

"4.3. With the extension of time limit and the requirement to file claims on a monthly basis, Board feels that the number of refund claims should be manageable for disposal within the normal period of three months. Further, in the absence of specific provision for payment of interest being made applicable under the said notification, the payment of interest does not arise for these claims. However, Board directs that the field formations shall ensure disposal of all such refund claims under the said notification within the normal period not exceeding three months from the date of receipt."

The appellant is before the CESTAT.

It is submitted that though there is no explicit mention about the interest on delayed sanction of refund under Notification No. 102/07-Cus, however,all the refunds are governed by Section 27 of the Customs Act and, accordingly, interest should be granted. The appellant also informed that on an identical issue the High Courts have allowed interest in -

(a) Ksj Metal Impex (P) Ltd Vs. Union of India [W.P. NO. 959 of 2013 order passed on 21/1/2013]

(b) Principal Commissioner of Custom Vs. Riso India Pvt Ltd [CUSAA 20/2015 order passed on 7/10/2015] = 2015-TIOL-2384-HC-DEL-CUS

The AR while reiterating the findings of the Commissioner (A) submitted that provision of section 27 shall not apply in case of refund under notfn. 102/2007-Cus in view of High Court decision in Pioneer Silk Mills Pvt. Ltd Vs. Union of India = 2003-TIOL-45-HC-DEL-CX.

The Bench observed:

"6. I find that the very same issue has been considered by the Hon'ble High Court of Madras and Delhi. In case of Ksj Metal Impex (P) Ltd (supra) passed by the Hon'ble Madras High Court, the judgment was passed under writ jurisdiction. However in case of Riso India Pvt Ltd. (supra) the Hon'ble High Court has passed judgment dealing with customs appeal filed under Section 130 of the Customs Act, 1962 wherein High court has passed following order:

x x x

In view of the above judgments of Delhi High Court in Customs Appeal, issue stand settled that the appellant is entitle for the refund of interest on delayed sanction of refund under Notification No. 102/07-Cus. As regard the Circular No. 06/2008 relied upon in the above judgments, Hon'ble high Court has held the said circular as ultra vires. As regard the judgment relied upon by the Ld. A.R., none of the judgment dealing with the issue of refund under Notification No. 102/2007-Cus whereas judgment of the Hon'ble Delhi High is directly on the issue involved herein. Therefore the ratio of the judgments cited by the Ld. A.R. are not relevant and not applicable to the present case. As per my above discussion and settled legal position on the issue involved, I am of considered view that appellant is entitled for the interest…."

The impugned order was set aside and the Appeal was allowed with consequential relief.

(See 2016-TIOL-1365-CESTAT-MUM)


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