Cus - Statutory interest which is payable, in event refund claims are not granted, serves as deterrent for holding up sums which are legitimately due and payable: HC
By TIOL News Service
MUMBAI, JULY 26, 2016: IN the matter of a refund claim filed by the petitioner assessee, the CESTAT while allowing their appeal held –
Cus - s. 27 of Customs Act, 1962 - Refund - Unjust enrichment - appellant has produced certificate issued by CA certifying that the excess duty paid by them did not form part of the cost of production - it is further proved that price of finished goods remain same before and after importation of the impugned goods - excess duty paid has been shown as receivable in the balance sheet - appellants have passed the bar of unjust enrichment and are entitled for refund - appeal allowed with consequential relief: CESTAT [para 6, 7]
We reported this decision dated 06.05.2014 as 2014-TIOL-1110-CESTAT-MUM.
Getting a favourable order is only half the story. Although the CESTAT had allowed the appeal with consequential relief, the relief took time to come.
The department refunded the amount of Rs.90,47,661/- only on 16.02.2015.
The assessee/petitioner is before the High Court and prays for issuance of writ of mandamus, or writ in the nature of mandamus, or any other appropriate writ, order or direction under Article 226 of the Constitution of India directing the respondents to grant interest on delayed refund amount within a time bound period.
The petitioner submitted that the refund was claimed as early as on 15.12.2006, however, as mentioned,the amount was refunded/paid on 16.02.2015. They had, therefore, made a representation to the authorities claiming interest u/s 27A of the Customs Act, 1962 which mandates that the interest (at notified rate) on the refund amount has to be paid from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty. Inasmuch as interest is payable from 15.03.2007 till 15.02.2015, the petitioner added. Reliance was also placed on the decision in the case of Ranbaxy Laboratories Ltd. - 2011-TIOL-105-SC-CX . However, there was no response from the department and, therefore, they addressed reminders on 18.05.2015 and 09.06.2015 which too went unheeded and hence the Writ Petition.
The petitioner also relied on the decision in Writ Petition No.6339 of 2015 (Tien Yuan India Private Limited Vs. The Union of India) - 2016-TIOL-433-HC-MUM-CX.
The counsel for the Revenue submitted that a writ petition simpliciter for a money claim does not lie and no mandamus can be issued directing payment of sum in money. [Suganmal Vs. State of M.P. & Ors AIR 1965 SC 1740 followed in Union of India V/s. Orient Enterprises - 2002-TIOL-254-SC-CUS refers ]
The High Court rejected the preliminary objection raised by the Revenue counsel and further observed –
++ This is a clear case of a statutory interest and which is payable in the event the refund claims are not granted. This serves as a deterrent for holding up sums which are legitimately due and payable. Therefore, the refund of duty must follow in the event there is a declaration in favour of the assessee that the amount was not payable. Once that amount is payable/refundable and a refund application was also made, which was allowed,what the respondents have done is only paid the sum, namely, the principal sum. The interest component for the delayed payment or refund has not been paid.
++ The writ petition is filed so as to claim this crystallized amount. There is no denial of the statutory provision, nor the mandate flowing therefrom is questioned. ++ If the amount is not refunded in time, it must carry interest. The period from the time the refund application was made and the amount of actual refund is the time period within which the obligation to pay the interest arises and precisely this is the interest which is being claimed. Ordinarily, the parties like the petitioner should not be required to make application for refund.
++ Once there is a refund order, as has been made in the present case in favour of the petitioner and even the implementation thereof is delayed, then, that must carry interest and that is why Section 27A [sub-section (1)] provides for payment of interest.
Directing that the interest in terms of Section 27A(1) of the Customs Act, 1962 shall be released and the sum paid as expeditiously as possible and within a period of twelve weeks, the Writ petition was allowed.
(See 2016-TIOL-1512-HC-MUM-CUS)
