The Bombay High Court recently slapped a cost of Rs.15,000/- on the Deputy Commissioner of Customs, CRC-I and directed the Customs to pay interest to the Petitioner at the rate of 6% per annum on delayed refund of Special Additional Duty ( SAD ) in terms of Sections 27 and 27A of the Customs Act, 1962.
The Writ Petitioner, M/s Ajay Industrial Corporation Ltd. is a manufacturer of various products related to the water management industry. In view of the directives of Notification No.102/2007 – Customs dated 14.09.2007, the Petitioner filed a claim for refund of SAD to the tune of Rs.7,40,458/- which was rejected by the Respondent.
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The was followed by a repeated back and forth between the Importer-Petitioner and Respondent wherein the Petitioner would appeal the rejection before the Commissioner (Appeals) who would remand the matter to the Respondent for reconsideration, which would then be denied by the Respondent and end up in appeal before the Commissioner (Appeals).
This cycle spanned over the course of eight years until 30.06.2022, when the Commissioner (Appeals) remanded the Petitioner’s refund claim to the Respondent. The inadvertent delay drove the Petitioner towards filing a complaint on the Centralised Public Grievance Redress and Monitoring System ( CPGRAMS ) Portal following which the Respondent intimated the Petitioner of having misplaced their file and requested the Petitioner to furnish all requisite documents and case papers.
A Writ Petition was lodged by the Petitioner before the Bombay High Court, represented by Raminder Kaur instructed by Sunil, citing difficulty in recovering interest on delayed refunds of six identical cases; the matter was disposed of by the Bombay High Court directing the Respondent to decide the interest claimed within four weeks from the date of Order.
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The Counsels for the Respondent Karan Adik and Mamta Omle refuted the Petitioner’s allegations of default in payable interest stating that the interest under Section 27A may only be calculated three months from Petitioner’s refund Application dated 08.08.2022, bringing it to a total of Rs.62,077/-.
The Division Bench of the Bombay High Court comprising Justice M.S. Sonak and Justice Jitendra Jain observed that no deficiencies had been raised by the Respondent against the Petitioner’s SAD refund application dated 04.08.2014, and that the co-ordinate Bench of the Bombay High Court had appreciated the contentions raised by the Petitioner in the earlier Writ Petition with the same subject matter.
The Bench further expressed that if the roles were reversed, the Department would promptly levy liability to pay interest on overdue duty from the due date; applying the same analogy and in respect of facts and law, the Bombay High Court allowed the Petition and directed the Respondent to pay Interest of Rs.4,21,940/- on the delayed refund of SAD within two months of judgment.
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Additionally, the Court directed the Respondent to pay costs of Rs.15,000/- to the Petitioner while also warning the Customs Department that they would be liable to pay Interest at 8% per annum to the Petitioner if they failed to abide by the direction of the High Court.
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