Cus - Ss 27 & 27A concerning refunds and interest on delayed refunds, would equally apply to refund of SAD leviable u/s 3 of CTA - Para 4.3 of CBEC Cir No.6/2008 is inconsistent with and ultra vires Sec 27A: HC
By TIOL News Service
NEW DELHI, OCT 13, 2015: THIS is a Revenue appeal against the CESTAT order dated 21.01.2015.
The Respondent filed a claim on 2nd March, 2010 in terms of Notification No. 102/2007-Cus for refund of SAD paid by it. The refund application was rejected on 18th June, 2010 on the ground that the period of limitation had expired. The appeal filed by the Respondent against the said order was allowed by the Commissioner of Customs (Appeals) on 4th January, 2011. The refund application was remanded to the Assistant Commissioner for a fresh consideration. Thereafter, the refund was granted. However, the claim of the Respondent for interest on the refunded SAD was rejected by the Assistant Commissioner by an order dated 30th March, 2012.
The appeal against the said order was dismissed by the Commissioner (Appeals) by an order dated 16th October, 2012. It was observed that the Respondent had not specifically claimed interest and sought only refund. Further, it was held that the refund under Notification No. 102/2007-Cus was not governed by Section 27 of the Act and, therefore, Section 27A of the Act would also not apply.
The CESTAT, followed the decision of the Madras High Court in KSJ Metal Impex (P) Ltd. which quashed paragraph 4.3 of Circular No. 6/2008-Customs and directed the Assistant Commissioner to pay interest to the Respondent on the refunded amount for a period after three months from the date of the application for refund till the date of refund.
Para 4.3 referred above 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 counsel for the Revenue submitted that the CESTAT erred in placing reliance on the judgment of the Madras High Court which has since been appealed before a Division Bench and in which an order has been passed staying the order of the Single Judge. Reference is also made to the decision in Sony India Pvt. Ltd.- 2014-TIOL-532-HC-DEL-CUS .
The High Court distinguished the decision in Sony India as being made in a different context.
Further,in view of the fact that the decision of Single Judge of Madras High Court (in KSJ Metal Impex (P) Ltd. ) is pending in appeal before a Division Bench, the High Court proceeded to examine the issue with reference to the provisions of the Act, the CTA, the Notification No. 102/2007-Cus and the CBEC Circular No. 6/2008.
It is observed -
++ The word 'duty' as defined in Section 2 (15) of the Act is wide enough to cover all kinds of customs duty. Section 3(8) of the CTA makes it clear that the provisions of the Act including those relating to drawback, refunds and exemptions shall "so far as may be" apply to the SAD chargeable under the CTA. There can be no doubt, therefore, in relation to the SAD levied under Section 3 of the CTA, the provisions of Section 27 and 27A of the Act concerning refund of duty and interest for delayed refund would apply.
++ Sections 27 and 27A of the Act form a statutory scheme for grant of refunds. Section 27A unambiguously states that where there is a delay in making the refund, interest would be payable on the amount of refund, in the manner stipulated under Section 27A of the Act. A collective reading of Section 3(8) of the CTA and Sections 27 and 27A of the Act leads to the conclusion that the provisions in the Act concerning refunds and interest on delayed refunds, would equally apply to refund of SAD leviable under Section 3 of the CTA. Circular No.6/2008 to the extent that it seeks to deny a successful applicant for refund of SAD, in terms of Notification No. 102/2007, interest on such refund in terms of Section 27A of the Act, is inconsistent with and ultra vires Section 27A of the Act.
Holding that the Department was not justified in denying interest to the Respondent on the delayed refund of SAD by resorting the para 4.3 of the CBEC's Circular No.6/2008, the High Court noted that no error had been committed by the CESTAT.
The Revenue appeal was dismissed.
(See 2015-TIOL-2384-HC-DEL-CUS)
