Interest u/s 27(A) gets applicable after expiry of 3 months from date of receipt of refund application

Commissioner of Customs Vs Oswal Woolen Mills Ltd (CESTAT Chandigarh)

CESAT Chandigarh held that interest u/s 27(A) of the Customs Act, 1962 is available after expiry of three months from the date of receipt of refund application till the date on which the refund has actually been paid.

Facts- The respondents are engaged in the import of Polyester Blankets/Polyester Mink Blankets made out of 100% Polyester Spun Yarn and Fleece Antipill Blankets etc falling under Tariff Heading 63014000 of the Customs Tariff Act, 1975. The respondents contended that the imported goods did not attract CVD, in as much as, the excise duty on the like articles if manufactured in India is exempt by Notification No. 30/2004-CE dt. 09.07.2004. The respondent submitted letters of protest stating that the Bills of Entry had been prepared at the gateway at www.icegate.gov.in and since the said exemption was not being reflected on the systems, they were making payment of CVD under protest.

Thereafter, the respondent filed the appeals before the Commissioner (Appeals), who upheld the order of the assessing authority by rejecting the appeals filed by them.

The order of the Commissioner (Appeals) was set aside by the CESTAT, Chandigarh. Thereafter, the respondents filed the refund claims. After the decision of the CESTAT, the Department sanctioned the refund claims, but ordered that the same to be transferred to the Consumer Welfare Fund in accordance with the provisions of Section 27(2) of the Customs Act, 1962 on the ground of bar of unjust-enrichment.

Refund was allowed by CESTAT. Thereafter, the respondents again filed the refund claims. The Department sanctioned the refund claims but interest was denied to the respondents on the ground that the matter was sub-judiced before the CESTAT and the refund claims were disposed of within the period of three months of the said order as prescribed under Section 27(A) of the Customs Act, 1962.

Commissioner (Appeals) allowed the appeals of the respondents. Being aggrieved, revenue has preferred the present appeal.

Conclusion- Held that the respondents are entitled to interest as per Section 27(A) of the Customs Act, 1962 at the applicable rate of interest as prescribed vide notification issued under Section 27(A) from time to time after expiry of three months from the date of receipt of refund application till the date on which the refund has actually been paid.
I am of the considered view that there is no infirmity in the impugned order and there is no need of any interference in the impugned order. Hence, I dismiss all five appeals filed by the Revenue by upholding the impugned order.

FULL TEXT OF THE CESTAT CHANDIGARH ORDER

The Revenue has filed these five appeals against the common impugned order dated 05.04.2022 passed by the Commissioner (Appeals), CGST, Ludhiana, whereby the ld. Commissioner (Appeals) has allowed the appeals of the respondents/assessees by setting aside the orders-in-original.

2.1 Since the issue involved in all five appeals is identical and there is a common impugned order, hence I proceed to decide all five appeals by this common order. Details of the refund claims filed by the respondents/assessees are as under:

2.2 For the sake of convenience the facts of Appeal No. C/60214/2022 are taken.

3.1 Brief facts of the present case are that the respondents/assessees are engaged in the import of Polyester Blankets/Polyester Mink Blankets made out of 100% Polyester Spun Yarn and Fleece Antipill Blankets etc falling under Tariff Heading 63014000 of the Customs Tariff Act, 1975. The respondents/assessees filed various Bills of Entry for the import clearance of Polyester Blankets/Polyester Mink Blankets from China. The goods were assessed to Basic Customs Duty and CVD leviable under Section 3(1) of the Customs Tariff Act, 1975, along with other duties payable under the Act. Further, the respondents/assessees contended that the imported goods did not attract CVD, in as much as, the excise duty on the like articles if manufactured in India is exempt by Notification No. 30/2004-CE dt. 09.07.2004. Further, due to the charging of CVD, the values for the purpose of calculating 2% Education Cess, 1% Higher Education Cess and 4% Special Additional Duty were also inflated resulting into excess payment of these duties proportionately. Consequent upon assessment of the Bill of Entry, the respondent/assessees submitted letters of protest stating that the Bills of Entry had been prepared at the gateway at www.icegate.gov.in and since the said exemption was not being reflected on the systems, they were making payment of CVD under protest.

3.2 Thereafter, the respondent/assessees filed the appeals before the Commissioner (Appeals), who upheld the order of the assessing authority by rejecting the appeals filed by them.

3.3 The order of the Commissioner (Appeals) was set aside by the CESTAT, Chandigarh. Thereafter, the respondents/assessees filed the refund claims. After the decision of the CESTAT, the Department sanctioned the refund claims, but ordered that the same to be transferred to the Consumer Welfare Fund in accordance with the provisions of Section 27(2) of the Customs Act, 1962 on the ground of bar of unjust-enrichment.

3.4 Aggrieved by the said order, the respondents/assessees filed the appeals before the Commissioner (Appeals) who vide order dated 21.06.2018 rejected the appeals of the respondents/assessees.

3.5 Further, aggrieved by the order dt. 21.06.2018 passed by the Commissioner (Appeals), the respondents/assessees preferred the appeals before the CESTAT, who vide its Final Order dated 02.04.2019 set aside the order dt. 21.06.2018 and allowed the appeals with consequential relief. Thereafter, the respondents/assessees again filed the refund claims as a consequential relief arising out of the Final Order dt. 02.04.2019 passed by the Division Bench of this Tribunal.

3.6 Thereafter, the Department sanctioned the refund claims but interest was denied to the respondents/assessees on the ground that the matter was sub-judiced before the CESTAT and the refund claims were disposed of within the period of three months of the said order as prescribed under Section 27(A) of the Customs Act, 1962.

3.7 Being aggrieved by the said order of not granting the interest, the respondents/assessees filed the appeals before the Commissioner (Appeals) seeking payment of interest on delayed refund. The Commissioner (Appeals) allowed the appeals of the respondents/assessees by the impugned order dt. 05.04.2022.

3.8 Aggrieved by the order dated 05.04.2022 passed by the Commissioner (Appeals), the Revenue has filed these five appeals.

4. Heard both the parties and perused the material on record.

5. The ld. D.R. appearing for the Revenue submitted that the impugned order dt. 05.04.2022 passed by the Commissioner (Appeals) is wrong in holding that the respondents/assessees are entitled to interest on the refund filed on the initial date of application as per Section 27(A) of the Customs Act, 1962. He further submitted that the claim of respondents/assessees were processed within the time limit of three months and the same was sanctioned as per the provisions of Section 27(2) of the Customs Act, 1962. He further submitted that as per Section 27(2), the Revenue is liable to pay interest from the date of decision of the Tribunal i.e. 02.04.2019. He also submitted that the subject refund claim has been disposed of within period of three months as prescribed under Section 27(A) of the Act and therefore, the respondents/assessees are not entitled to claim the interest on the said refunds.

6. On the other hand, the ld. Counsel for the respondents/asseessees submitted that the impugned order passed by the Commissioner (Appeals) is valid and legal and there is no infirmity in the order passed by the Commissioner (Appeals) who has relied upon the decisions of this Tribunal as well as the Hon’ble High Courts and on the judgment of Hon’ble Apex Court in the case of M/s Ranbaxy Laboratories Ltd vs. UOI – 2011 (273) ELT 3 (SC).

7. After considering the submissions made by both the parties and perusing the material on record, I find that as per the law laid down by the Hon’ble Apex Court in the case of M/s Ranbaxy Laboratories Ltd (supra) wherein Hon’ble Apex Court has held that the Revenue is liable to pay interest under Section 11BB of the Act and the period commences from the date of expiry of three months from the date of receipt of the application for refund under Section 11B(1) of the Act and not on the expiry of said period from the date on which the order of refund is made.

8. Further, I find that the ld. Commissioner (Appeals) in the impugned order has discussed the provisions of Section 27(A) of the Customs Act, 1962 and has also relied upon the decision of Hon’ble Apex Court and also the decision of Hon’ble Gujarat High Court and also discussed about the decision of the Tribunal in the case of M/s Andhra Organics vs. Commissioner of Central Tax, Visakhapatnam (Final Order No. A/31109/2022 dt. 10.11.2020) and thereafter came to the conclusion that the respondents/assessees are entitled to interest as per Section 27(A) of the Customs Act, 1962 at the applicable rate of interest as prescribed vide notification issued under Section 27(A) from time to time after expiry of three months from the date of receipt of refund application till the date on which the refund has actually been paid. Here, it is pertinent to reproduce the relevant findings of the ld. Commissioner (Appeals) contained in para 9 to para 13 which are reproduced herein below:

9. In view of above discussion and judgments cited supra, I am of the considered view that there is no infirmity in the impugned order and there is no need of any interference in the impugned order. Hence, I dismiss all five appeals filed by the Revenue by upholding the impugned order.

10. The appeals are accordingly dismissed.

(Order pronounced on 02.2023)