Brief of the case:
- The Hon’ble Delhi High Court in the case of Riso India Private Limited held that the Special Additional Duty of Customs is also a duty leviable under Customs Act,1962 and all the procedures regarding demand, refund , drawback as applicable to all other custom duties would also be applicable to SAD.
- Therefore, refund of SAD is well covered by Sec 27 and resultantly delayed refund would entitle assessee for interest u/s 27A.
Facts of the case:
- The assessee company filed a claim for refund of Special Additional duty of customs (SAD) u/ Notification No. 102/2007 dated 2nd March, 2010. The claim so made was rejected due to expiry of limitation period for making such claim. However, the same was allowed on the order of Commissioner of Customs (Appeals) and refund was accordingly granted.
- Assessee along with refund also claimed interest on delayed refund, but the same was rejected by the Assistant Commissioner by an order dated 30th March, 2012.Assessee appealed against such rejection, but the same was dismissed by the Commissioner of Customs (Appeals) by an order dated 16th October, 2012.
- Aggrieved by the order of 1st appellate authority assessee appealed before CESTAT New Delhi and the interest claim was allowed by the CESTAT by relying on the decision of Hon’ble Madras High Court in the case of KSJ Metal Impex Private Ltd.
- Revenue aggrieved by the order of CESTAT is in appeal before the High Court.
Contention of the Assessee:
- It was submitted that the SAD is also a type of customs duty and like other refunds the delayed refund of it also would entitle assessee to claim interest u/s 27A. Mere issuing a circular to deny the benefit of interest could not override the statutory benefit available to assessee.
Contention of the Revenue:
- It was submitted by learned counsel for the revenue that the CESTAT erred in placing reliance on a judgment of the Madras High Court which has since been appealed before a Division Bench of the Madras High Court.
- Further, it was held that the refund under Notification No. 102/2007 was not governed by Section 27 of the Act and, therefore, Section 27 A of the Act would also not apply.
Issue before the High Court:
- Whether assessee was entitled to interest on delayed payment of SAD refund u/s 27A of the Customs Act,1962?
Held by Hon’ble High Court:
- The court observed that the word ‘duty’ has been defined u/s 2(15) of the Customs Act,1962 and includes all types of customs duties .As such the duty also includes SAD leviable u/s 3(5) of Customs Tariff Act (CTA),1975.
- Further, Sec 3(8) of the Customs Tariff Act also provides that the provisions of the Act including those relating to drawback, refunds and exemptions shall “so far as may be” apply to the SAD chargeable under the CTA. Therefore, undoubtedly the provisions of Section 27 and 27A of the Act concerning refund of duty and interest for delayed refund would apply to refund of SAD also.
- Sec 27A clearly provides that where there is a delay in making the refund, interest would be payable on the amount of refund, in the manner stipulated under Section 27A of the Act. Thus, on a combined reading of Sec 27, 27A of Customs Act and Sec 3(8) of CTA provide it can be deduced that the provisions in the Act concerning refunds and interest on delayed refunds, would equally apply to refund of SAD. Circular No.6/2008 to the extent that it seeks to deny a successful applicant for interest on delayed refund of SAD, is inconsistent with and ultra vires Section 27A of the Act.
- Thus, assessee is entitled to interest on delayed refund of SAD, accordingly the appeal of revenue was dismissed.