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2015 (9) TMI 34 - KARNATAKA HIGH COURT

2015 (9) TMI 34 - KARNATAKA HIGH COURT - 2015 (324) E.L.T. 259 (Kar.) - Refund of Duty Payment of Interest delay in refund - Aggrieved by order of tribunal, granting refund of custom duty along with interest, revenue preferred present appeal Whether Revenue was liable to pay interest on refund of duty Held that:- Section 27-A makes it clear that interest would be payable if amount is not refunded within three months from date of application Explanation of provision only means that liab .....

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date of application filed by respondent Thus, liability to pay interest would be from three months after date of application till date of its actual payment Also respondent would be entitled to costs or compensation for high handedness of appellant, by initially not refunding amount for over 12 years, and then refusing to pay interest even after order of Tribunal Decided against Revenue. - CSTA No. 4/2015 - Dated:- 13-8-2015 - Vineet Saran And B. Manohar, JJ. For the Appellant : Sri C Sha .....

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f are that on 04.06.1998 the respondent-company had imported certain items and cleared the same on payment of customs duty. Later, the respondent realized the mistake of having deposited the customs duty, as the good which were imported were exempted from customs duty under Notification dated 02.06.1998. Thus, the respondent-company filed an application on 24.12.1998 under Section 27 of the Act for refund of customs duty amounting to ₹ 1,06,74,049/-, which was deposited on 04.06.1998. By o .....

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ion dated 02.06.1998 and ordered refund of the amount, being ₹ 1,06,74,049/-, but after holding that the respondent-company had not been able to show that the burden of duty had not been passed on directly or indirectly to some other person, rejected the claim of refund on the ground of unjust enrichment, and directed the said amount to be credited in the account of the Consumer Welfare Fund. Challenging the said order of the Commissioner, the respondent-company filed an appeal before the .....

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ed 13.04.2011, the Assistant Commissioner of Customs, sanctioned refund of ₹ 1,06,74,049/- to the respondent-company, being the excess Customs duty paid by him, but denied the claim of interest made by the respondent-company under the provisions of Section 27A of the Act, presumably on the ground that the respondent-company had, under the said provision, become entitled to the payment of the said amount of refund only within three months from the date of the judgment of the Supreme Court i .....

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13.04.2011 before the Commissioner of Customs (Appeals), which was dismissed by order dated 13.01.2012 holding that the respondent-company was not eligible for interest since the refund was sanctioned within three months from the date of the judgment of the Supreme Court and also on the ground that the amount to be refunded was with the Consumer Welfare Fund for substantial period. Aggrieved by the said order, the respondent-company filed a further appeal before the Tribunal, which by a detailed .....

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ent is liable to pay interest on refund amount for such delay? ii. Whether the Explanation under Section 27A is to be read as Explanation relevant for order under Section 27(2) and not relevant for calculation of delay under Section 27A? iii. Whether the Tribunal is right in creating legal fiction that in every case of consequential refund initially rejected on merits by the department, if such rejection is set aside by the appellate for a, the department is liable to pay interest from the date .....

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C. Shashikantha, learned counsel for the appellant as well as Sri Ganapathi Hegde and Sri R.G. Sheth, learned counsel for the respondent and perused the record. 5. The entitlement of refund of customs duty deposited by the respondent on 04.06.1998 has been upheld upto the Supreme Court. The claim of the respondent-company initially was that, though it had deposited the customs duty on 04.06.1998, but in terms of the Notification 02.06.1998, it was not liable to pay the same as the items in quest .....

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ust enrichment. Then, even when on 27.07.2005, the Tribunal allowed the appeal of the respondent-company with consequential benefits, yet the amount was not refunded and therefore, the matter was taken up by the Revenue before the High Court and further also before the Supreme Court, where the appellant-Revenue had been unsuccessful. It was then, after more than 12 years of filing of the application for refund, on 13.04.2011 an order was passed by the Assistant Commissioner for refunding the amo .....

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d. Admittedly, the respondent was deprived of the amount of over ₹ 1 Crore which had been deposited by it, and was found refundable to the respondent-company. Earlier also, the appellant dragged on the matter up to the Supreme Court, and paid the amount only after more than 12 years when the matter was finalized by the Supreme Court. Now again, with regard to the interest part, even when the Tribunal had directed payment of interest from three months after the date of the application, till .....

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21.02.2011 passed by the Supreme Court, whereby the SLP of the appellant had been dismissed and thus the appellant would not be liable to pay any interest. In support of his submission, he relies on Explanation to Section 27A of the Act. It has also been contended that the appellant would not be liable to pay interest because for a substantial period, the amount was lying with the Consumer Welfare Fund, and further during the pendency of the appeal before the High Court there was a stay order gr .....

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t;Sec.27A-Interest on delayed refunds- If any duty ordered to be refunded under sub-section (2) of section 27 to an applicant is not refunded within three months from the date of receipt of application under sub-section (1)of that section, there shall be paid to that applicant interest at such rate, not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such duty from the date immed .....

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immediately after three months from such date, till the date of refund of such duty. Explanation: Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal, the National Tax Tribunal or any court against an order of the Assistant Commissioner of Customs or Deputy Commissioner of Customs under sub-section (2) of section 27, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the court shall be deemed to be an order passed under .....

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r of refund of the amount is finalized, either in appeal or by the Commissioner, Tribunal or the Court, but such liability would be from three months after the date of application. The same cannot be interpreted that the liability to pay interest would be from the date of the order of the Tribunal or the Court, which may be passed in appeal. 12. While considering a similar case under the Central Excise Act, the Apex Court in Ranbaxy Laboratories Ltd., (supra) has interpreted under Section 11BB a .....

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Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section(2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act.…The said Explanation does not have any bearing or connection w .....

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ability to pay interest would be from 24.03.1999 till the date of its actual payment in terms of the order dated 13.04.2011. The rate of interest would be as has been notified by the Central Government in its Official Gazettee from time to time. 13. What we now find (which has also been contended by learned counsel for the respondent-Company) is that the appellant has been misinterpreting the law, and thereby depriving the respondent from its rightful claim of interest, even after the order for .....

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