CESTAT allows Interest u/s 27(A) of Customs Act at applicable Rate upon Expiry of three months from date of Receipt of Refund application till date on which Refund actually Paid

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench allowed interest under Section 27(A) of the Customs Act at applicable rate upon expiry of three months from date of receipt of refund application till date on which refund actually paid.

The respondents/assessees, M/s OswalWoolen Mills Ltd, filed various Bills of Entry for the import clearance of Polyester Blanketsfrom 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.

Later 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.

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. Hence the present appeal.

The Counsel for the Revenue submitted that the order 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.

The Counsel 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 and hence 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.

The Tribunal of SS Garg, Judicial Member observed 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.”

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