The Delhi High Court has held that the assessee is entitled to interest on delayed refund under section 27-A of the Customs Act, 1962. It was found that Section 27-A provides for the payment of interest on the delayed refund on customs duty. It is manifest that the deposit of penalty, redemption money or bank guarantee does not fall within the ambit of Section 27-A of the Act, not being a custom duty.
Raj Kumar Batra, the petitioner sought issuing directions to the respondent to refund the pre-deposit amount of Rs. 9,30,000/- paid by the petitioner along with applicable interest in terms of Central Board of Indirect Taxes & Customs [“CBIC”], Circular No. 984/08/2014-CX dated 16.09.2014 and for the refund of the seized cash amount of Rs. 14,10,990/- along with applicable interest to the petitioner in compliance to the Final Order passed by Customs Excise & Service Tax Appellate Tribunal [CESTAT],
Petitioner, Raj Kumar Batra, is a trader of musical gadgets like car stereo, amplifiers, speakers etc., having its shop under the name and style of M/s. Music Palace at Kashmere Gate, Delhi. He deals in the goods which are manufactured in India as well as the goods of foreign origin.
Based on specific information, Officers of Customs searched for the shop of the petitioner situated at 597, Hamilton Road, Kashmere Road, Delhi as also at a godown of the said firm at 599, Hamilton Road, Kashmere Gate, Delhi, based on Search Authorization issued by Assistant Commissioner of Customs (Preventive). The search resulted in the recovery of huge stock of electronic goods of foreign origin and the Indian Currency of Rs. 14,10,000/-. The same were seized under Section 110 of the Customs Act, 1962 on the reasons to believe that the same have been imported/acquired/possessed and kept in custody in contravention of EXIM Policy, Chapter-1A of FTP-ITC (HS) Classification 2004-09 read with Standards of Weight & Measures (SWM Act), and Packaged Commodities Rules, 1977, and thus were liable to confiscation under the provisions of the Customs Act, 1962.
Statement of petitioner was recorded under Section 108 of the Customs Act, wherein, he admitted the recovery of cash and seizure of goods of foreign origin collectively valued at Rs. 92,73,350/- and Rs. 14,10,900/-. The seized goods were released provisionally to the petitioner on 11.09.2008 and 12.09.2008 upon furnishing a bond of Rs. 92,73,350/- and a bank guarantee of Rs. 9,30,000/-.
Show Cause Notice was issued to the petitioner, wherein, he was asked to show cause as to why the electronic goods of foreign origin valued at Rs. 92,73,350/- and the Indian Currency amounting to Rs. 14,10,990/-, belonging to the petitioner, should not be confiscated under Section 111 (d) and Section 121 of the Customs Act, 1962 and why penalty should not be imposed upon him under Section 112 of the Customs Act.
The Adjudicating Authority ordered for the confiscation of Indian Currency amounting to Rs. 14,10,990- under Section 121 of the Customs Act, 1962 and imposed a penalty of Rs. 2 lakhs upon the petitioner under Section 112 of the Customs Act, 1962.
On appeal, the CESTAT set aside the Order-in-Original dated 29.10.2009 and held that the petitioner is entitled to consequential benefits including the refund of the amount seized/confiscated.
It was found that Section 27-A provides for the payment of interest on the delayed refund on customs duty. If there is any delay in sanctioning the amount of refund, if any is available as per the Tribunal’s order, the applicant in such cases can make a claim for the same from the department and such interest shall not be below 5% and not exceeding 30% per annum as is fixed by the Central Government by Notification in the Official Gazette. It is manifest from the Section that deposit of penalty, redemption money or bank guarantee does not fall within the ambit of Section 27-A of the Act, not being a custom duty.
In R.H.L. Profiles Ltd. Vs. Commr. Of Cus., Ex. And Service Tax, Kanpur, it was held that on the amount which was illegally confiscated by the Revenue and ultimately refunded, the assessee-appellant is entitled to interest and the department is under obligation to pay the same.
The Court observed that the revenue has retained the redemption money and the penalty amount without any right and held that respondent is under obligation to grant interest to the petitioner on the whole amount of Rs. 9,30,000/- (redemption charges and penalty) and not just on the pre-deposit amount, which was the statutory requirement under Section 129E of the Customs Act, 1962.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja quashed the impugned Corrigendum dated 10.02.2023 issued by Assistant Commissioner (Refund) and directed the respondent to refund Rs. 9,30,000/- to the petitioner along with interest at the rate of 6% per annum from the date of the deposit till the date of refund. Respondent is directed to process the refund within two weeks.
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