2008 (1) TMI 291 - AT - Customs

Interest on account of the inordinate delay in sanctioning the refund appellant claim for concessional rate of duty at time of import was rejected by revenue - appellants were forced to discharge the full rate of duty - There was a legal battle and the Tribunal in the GSFC case vindicated the stand of the appellant that they were entitled for concessional rate of duty hence interest for delayed refund is entitled

Summary

Issues:
Granting of interest on account of inordinate delay in sanctioning the refund.

Analysis:
The appeals were filed against orders related to the granting of interest due to delays in refund sanctioning. The appellant, involved in manufacturing Ammonium Nitrate, imported Anhydrous Liquid Ammonia, claiming concessional duty rates. Despite legal battles, the Department did not grant the concessional rate, leading to refund claims in 1996 and 1997. The Department accepted some claims but delayed others, citing provisional assessments. Despite judicial decisions in the appellant's favor, the Department did not grant the refund, leading to appeals and court directions. The Department finally sanctioned the refund in 2004 but did not grant interest. The appellant sought interest on interest due to the delay, citing legal precedents.

The appellant argued for interest based on Section 27A of the Customs Act, citing delays in refund sanctioning. The amounts claimed under the appeals included interest from the date of filing claims till receipt, and interest on interest. The learned SDR contended that refunds are due after receiving favorable orders from the Commissioner's office, reiterating lower authority decisions.

After considering the case history, the Tribunal noted that refunds were sanctioned but interest was not paid. The Tribunal highlighted the delay in refund sanctioning despite court directions and the intervention of the Member (Customs), CBEC. Section 27A of the Customs Act mandates interest on delayed refunds, starting three months after the refund claim filing. The Tribunal emphasized the entitlement to interest on interest due to inordinate delays in interest grant. Therefore, the appeals were allowed, granting interest on interest till the date of payment.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the obligation to pay interest on delayed refunds as per Section 27A of the Customs Act. The decision highlighted the importance of timely interest payments and granted interest on interest due to the prolonged delay in refund sanctioning.