Delay of 253 Days in Granting Refund of Customs Duty: CESTAT Confirms Interest at 6% for Delay upto Date of Sanctioning Refund [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed an interest at 6% for delay upto date of sanctioning refund as there was a delay of 253 days in granting refund of customs duty.

The appellant M/s.Nanda Agency House Shipping Services Pvt. Ltd. filed Bill of Entry for clearance of goods viz. “Glass Bottom Boat Looker 350” for which classification was declared as CTH 89011030 attracting ‘Nil’ rate of duty. The Department was of the view that the correct classification was CTH 89039200 attracting merit rate of duty which resulted in payment of duty of Rs.93,47,327/- by the appellant.

Thereafter, the bill of entry was reassessed classifying the goods under CTH 89011030 at ‘Nil’ rate of duty itself. The appellant filed refund claim of the duty of Rs.93,47,327/- paid by them and there was a delay of 253 days in granting the refund.

The Counsel, Madhumitta Bagchi appeared and argued for the appellant. It was submitted that the appellant had intended to start business using the imported boat for the purpose of tourism. All these eventualities caused immense financial constraints upon the appellant who had to borrow loan from private financiers also. The appellant is suffering huge monetary loss due to the interest paid to the bank and other private financial institutions. It is prayed that the appellant ought to be allowed interest at the rate of 9% for 455 days as computed from the date of payment of duty itself.

R.Rajaraman appeared for the appellant. It is submitted that as per the provisions contained in Section 27A, interest is liable to be paid only in case of delay after 3 months from the date of application of refund. In the present case, the application for refund is filed on 03.02.2016 and the refund ought to have been granted on 03.05.2016. The appellant has received the refund on 11.01.2017. There is delay of 253 days when computed from 03.05.2016 till 11.01.2017. Interest has been sanctioned at 6% which is the notified rate of interest.

A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and C Sulekha Beevi, Judicial Member observed that “The Commissioner (Appeals) has relied on the cases only to take the view that the appellant is eligible for interest due to delay. This does not mean that an assessee is always eligible for enhanced rate of interest than the notified rate of interest. We do not find any circumstances in the present case warranting to grant increased rate of interest to the appellant.”

To Read the full text of the Order CLICK HERE

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