2025 (5) TMI 1929 - AT - Customs

Seeking grant of interest towards the delayed payment of refund - mistake committed by the appellant while filing the Shipping Bill - implications of the subsequent amendment under Section 149 of the Customs Act 1962 - HELD THAT - Since the amendment was carried out on 12th January 2019 and it is within the knowledge of the customs officials on that day itself I find that the interest should have been granted from that day onwards. Coming to the impugned order I find that the Commissioner (Appeals) is in error in holding that the appellant has approached a wrong authority after the order was passed by the High Court. Since the OIO granting the refund was already passed by the adjudicating authority the appellant could not have filed any letter asking him to release the interest thereon as he has become functus officio. Therefore the appellants have correctly followed the procedure and filed their appeal before the Commissioner (appeals). He is in error in rejecting their appeal. Thus I find that the appellant would be eligible for interest on the drawback from 12th January 2019. Therefore I remand the matter to the adjudicating authority and direct him to grant the interest on the refunded amount with effect from 12th January 2019 till 16th January 2024 the date on which the refund was already granted. The appeal stands disposed of thus.

Summary

The core legal questions considered in this matter include:

1. Whether the appellant was entitled to drawback refund despite the initial error in the Shipping Bill serial number, and the implications of the subsequent amendment under Section 149 of the Customs Act, 1962.

2. Whether the delay in sanctioning the drawback refund, caused by technical glitches in the Government portal, justifies the payment of interest to the appellant for the period of delay.

3. Whether the appellant's appeal before the Commissioner (Appeals) seeking interest on the delayed refund was maintainable, or whether the appellant ought to have approached the adjudicating authority instead.

Issue 1: Entitlement to Drawback Refund Despite Initial Error and Amendment Validity

The relevant legal framework involves Section 149 of the Customs Act, 1962, which permits amendment of Shipping Bills to rectify errors. The appellant initially filed the Shipping Bill on 30.08.2017 with the drawback serial number erroneously stated as 8439A instead of 8439B. Since serial number 8439A did not attract any drawback, the Department initially denied refund.

On 12.01.2019, the appellant applied for and obtained an amendment of the Shipping Bill under Section 149 to correct the serial number to 8439B, which entitled them to drawback. The amendment was effected manually, and the Certificate of Manual Amendment was forwarded to the Deputy/Assistant Commissioner of Customs drawback cell for necessary action.

The Court noted that the amendment was within the knowledge of the Customs officials from January 2019, and therefore, the appellant's eligibility for drawback refund was established from that date. The appellant's repeated correspondence from 2020 to 2023 further evidenced their persistent attempts to secure the refund.

The Department's refusal to grant drawback refund despite knowledge of the amendment was attributed to technical difficulties in the Government portal, which failed to recognize the manually amended Shipping Bill. This was confirmed by internal communications and the Hon'ble High Court's observation in the Writ Petition filed by the appellant.

The Court concluded that the appellant was entitled to the drawback refund from the date of amendment, and the failure to grant refund was not attributable to the appellant but to systemic glitches.

Issue 2: Entitlement to Interest on Delayed Refund

The Customs authorities, after the High Court's direction on 04.12.2023, granted the refund on 16.01.2024 but did not award any interest for the delay. The appellant sought interest on the delayed payment, which was supported by the High Court's subsequent direction on 12.04.2024 to provide interest as per law.

The Commissioner (Appeals) dismissed the appellant's appeal for interest on the ground that the appellant should have approached the adjudicating authority for such relief, not the Commissioner (Appeals).

The Court analyzed the statutory provisions and factual matrix and found that since the amendment was effected and known to the Customs officials from 12.01.2019, the appellant was entitled to interest on the refunded amount for the period from that date until the refund was actually granted on 16.01.2024.

The Court emphasized that the delay was caused by the Department's failure to process the refund due to technical issues, and the appellant was not at fault. Therefore, the appellant's claim for interest was justified.

Issue 3: Maintainability of Appeal Before Commissioner (Appeals) for Interest

The Commissioner (Appeals) held that the appellant had approached the wrong authority for interest, suggesting that the adjudicating authority should have been approached instead. The Department supported this view, asserting that the appellant ought to have sought interest from the adjudicating authority following the High Court's direction.

The Court disagreed, reasoning that once the adjudicating authority had passed the Order-in-Original granting refund, it became functus officio (i.e., its powers in the matter were exhausted). Consequently, the appellant could not have sought interest from the same authority post-decision.

The Court held that the appellant was correct in filing an appeal before the Commissioner (Appeals) for interest on the delayed refund. The Commissioner (Appeals) erred in dismissing the appeal on procedural grounds.

Significant Holdings and Core Principles Established

"Since the amendment was carried out on 12th January 2019 and it is within the knowledge of the customs officials on that day itself, I find that the interest should have been granted from that day onwards."

"The Commissioner (Appeals) is in error in holding that the appellant has approached a wrong authority after the order was passed by the High Court. Since the OIO granting the refund was already passed by the adjudicating authority, the appellant could not have filed any letter asking him to release the interest thereon as he has become functus officio."

"On going through the factual matrix and the statutory provisions, I find that the appellant would be eligible for interest on the drawback from 12th January 2019."

"I remand the matter to the adjudicating authority and direct him to grant the interest on the refunded amount with effect from 12th January 2019 till 16th January 2024, the date on which the refund was already granted."

The Court's final determinations are:

• The appellant was entitled to drawback refund from the date of amendment (12.01.2019), notwithstanding the initial error in the Shipping Bill.
• The delay in refund sanction due to technical glitches in the Government portal justified payment of interest on the refunded amount for the period from 12.01.2019 to 16.01.2024.
• The appellant's appeal before the Commissioner (Appeals) seeking interest was maintainable, and the dismissal of the appeal on the ground of improper forum was erroneous.
• The matter is remanded to the adjudicating authority with directions to grant interest on the refunded amount for the delay period as specified.