Jaina Marketing And Associates Vs Union of India And Ors (Delhi High Court)
Conclusion: Interest on customs refund was not automatic and depends on whether there was delay in processing attributable to the department, while granting relief in cases where reassessment and refund were delayed and denying it where refunds were issued within the statutory period.
Held: Assessees imported mobile devices and paid excess customs duty (CVD) due to inability to claim concessional rate on the EDI system. Upon re-assessment and appellate proceedings, substantial refunds were granted, but interest on such refunds was denied by the authorities. Assessees contended that excess duty was paid under protest and retained by the Department for long periods; hence, interest was payable from date of deposit or at least from crystallisation of entitlement. Revenue argued that interest was governed strictly by Section 27A and was payable only if refund was delayed beyond 3 months from a valid refund application. The Court examined the statutory framework, judicial precedents, and factual matrix, emphasizing that entitlement to interest depends on nature of payment, timing of reassessment, and statutory compliance under Section 27/27A, and could not be denied where retention of money was unjustified. The court directed the department to pay interest in such cases from the date of filing of the reassessment application till the date of refund, within a period of three months.
