The New Delhi bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that interest on refund of excess duty paid is statutory right u/s 27A and no discretionary power on revenue Authority to reject such claim.
The appellant, M/s. MSG Enterprises is an importer, who imported fabrics. At the time of import, the goods were assessed at a higher value than the declared value by the proper officer. Although the appellant did not agree with the enhancement, however, they paid the duty for taking clearance and filed an appeal before the Commissioner of Customs (Appeals). On being successful in the appeal before the Commissioner (Appeals), the appellant applied for a refund of the excess duty paid.
The appellant approached the DGFT for allowing re-credit of the amount refunded by way of credit to the scrips. Further, the DGFT rejected the recredit in the scrips/license. Thereafter, the appellant again approached the Adjudicating Authority for a grant of refund of the amounts in cash, and the same was refused by Adjudicating Authority mentioning that there were no such directions/instructions/circulars for the grant of refund in cash, for the amount of the duty paid through scrips.
Aggrieved by the order of Adjudicating Authority the appellant preferred to appeal before the Commissioner (Appeals). Commissioner (Appeals) placing reliance on the ruling of Delhi Tribunal, in the case of Commissioner of Customs & Excise Vs. M/s. Artex Textile Pvt. Ltd., directed a refund of the amount in cash and rejected the claim for interest stating it is barred by limitation under section 128 of the Customs Act. The assessee preferred to appeal against the rejection of interest on refund before ITAT.
The counsel for the appellant submitted that as per the provisions of Section 27 A, where a refund is not granted within three months from the date of receipt of the application, that shall be paid to the applicant with interest at such rate, as notified, on such duty, from the date immediately after the expiry of three months, from the date of receipt of such application, till the date of refund of such duty. Thus, the statute provides for mandatory payment of interest, and there is no discretionary power with the Revenue Authority in the matter of interest. Accordingly, he prays for a grant of interest, as per Statute.
The Coram of Mr. Anil Choudhary, Member (Judicial) has held that “I find that the Commissioner (Appeals) has misconceived the issue of interest by rejecting the same by referring to the provisions of Section 128 of the Customs Act. I hold that the appellant is entitled to interest from the end of three months from the date of refund application before the Adjudicating Authority, till the date of grant of refund in cash”.
Mr. Ayush Agarwal appeared for the appellant and Mr. Mahesh Bhardwaj, appeared for the revenue.
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