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Cus – Refund sanctioned but not granted within 3 months of date of receipt of application – s.27 being a statutory mandate, department to pay interest: CESTAT

2019-TIOL-2098-CESTAT-DEL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COURT NO. IV

Customs Appeal No. 53646 of 2018 [SM]

Arising out of Order-in-Appeal No. CCA/CU/D-II/ICD-TKD/1971/18, Dated: 02.08.2018
Passed by the Commissioner of Appeals, IGI New Custom House, New Delhi

Date of Hearing: 08.03.2019
Date of Decision: 24.06.2019

M/s POLARIS INDIA PVT LTD
PLOT NO.14/6, MATHURA ROAD, NEAR MEWALA MAHARAJPUR METRO STATION
OPP METRO PILLAR NO 585, (ADJACENT TO BMW SHOWROOM)
FARIDABAD-121003

Vs

COMMISSIONER OF CUSTOMS, (IMPORTS)
ICD TUGHLAKABAD, NEW DELHI

Appellant Rep by: Shri Ritesh Jindal, CA
Respondent Rep by: Shri K Poddar, AR

CORAM: Rachna Gupta, Member (J)

Cus – The assessee is engaged in import of all Terrain Vehicles (ATVS) and its spare parts from outside India – They filed a refund claim on 31.07.2013 against 13 Bill of Entries cleared during the period of August, 2011 to January, 2012 – All the said 13 Bills were provisionally assessed at the time of clearance of goods – The refund was claimed on account of payment of 8% Special Excise Duty and on account of excess payment of CVD as was claimed by parties – The application of refund was partly allowed as far as the amount of SED was concerned – However the refund qua CVD was rejected – Perusal of the said order shows that the refund of SED was nowhere being objected that a fresh application of refund for CVD was filed on 11.08.2014, which was sanctioned vide O-I-O – The perusal of said order shows that the order has nowhere questioned the sanction of refund of 8% of SED – It rather sanctioned the refund of CVD as well – However, without interest which order has been confirmed by Order under challenge – The application is within one year of the last Bill of Entry among 13 i.e. dated 05.01.2012 – Even first Bill of entry fulfills the aforesaid limitation as applicable to assessee – Section 27 (1B) prescribes the mode of computing the aforesaid period of limitation of one year – Thus, Sub-clause (c) thereof gives the extended time to the assessee and not to the Department – The refund claim herein was filed much prior to the date of final assessment of duty – Department is, therefore, opined to not to be entitled of any benefit out of Section 27 (1B) (c) of the Act, as apparently no fresh application after re-assessment / final assessment of SED as well as CVD was at all filed by assessee – His refund application is the one dated 31.07.2012, which was filed within one year of the payment of duty as was provisionally assessed – Hence, no benefit of extended period of limitation can be made available to Department – Department was otherwise liable to make an order on the refund application and in case the competent authority is of the opinion that the amount is refundable – He may make an order accordingly, and the amount so determined mandatorily to be credited to the fund – Section 27 (a) of Customs Act says that if any duty ordered to be refunded under Sub-Section (2) of Section 27 to the applicant is not refunded within 3 months from the date of receipt of application under sub-section (1) of Section 27 they shall be paid to the applicant the interest at such rate as is mentioned in the said Section – The application for refund was filed on 31st July, 2012, another application in continuation thereof was filed on 11.08.2014 – Reassessment was on 24.11.2015 – Apparently and admittedly, the amount of refund has been sanctioned but has not been refunded within 3 months from the date of receipt of the application, Section 27 (a) being a statutory mandate upon the Department, Department is liable to pay the interest on the sanctioned amount for the delayed period – The order under challenge is hereby set aside: CESTAT

Appeal allowed

Case laws cited:

IVRCL Infrastructure & projects Ltd. vs. Union of India 2010 (257) ELT 33 (Bombay)… Para 3

SR Steel Limited vs. Union of India – 2003-TIOL-492-HC-AHM-CUS … Para 3

FINAL ORDER NO. 50794/2019

Per: Rachna Gupta:

The appellant in the present case is engaged in import of “all Terrain Vehicles (ATVS) and its spare parts from outside India. The appellant filed a refund claim of Rs.1,05,86,773/- on 31.07.2013 against 13 Bill of Entries cleared during the period of August, 2011 to January, 2012. All the said 13 Bills were provisionally assessed at the time of clearance of the goods. The refund was claimed on account of payment of 8% Special Excise Duty amounting to Rs.14,52,929/- and on account of excess payment of CVD as was claimed by the parties to the tune of Rs.91,33,845/-. This refund claim was partly allowed vide the Order-in-Original No.32,172/- dated 03.10.2013 to the extent of Rs.14,52,928/- pertaining to the refund of 8% SED as the same was abolished with effect from 01.03.2006 vide Notification No.9/2006 dated 01.03.2006. However, the refund of excess payment of CVD was rejected. In an appeal thereof Commissioner (Appeals) vide order dated 04.08.2014 had remanded back the matter for fresh decision after providing the opportunity of hearing to the party and also after considering the Chartered Engineers Certificate, affidavit and other documents as were submitted by the party. But these were not considered by the original adjudicating authority. Since the Commissioner (Appeals) had disposed of the appeal by way of restoration of refund claim for usual scrutiny and disposal that the party filed the refund claim of Rs.91,33,845/- (for excess CVD) on 11.08.2014. The said refund was sanctioned vide Order dated 03.02.2016. However, the demand of interest of the appellant was rejected. Being aggrieved, the appeal was preferred before Commissioner (Appeals), who vide order dated 02.08.2018 has rejected the appeal. Still being aggrieved, the appellant is before this Tribunal.

2. We have heard Shri Ritesh Jindal, learned Counsel for the appellant and Shri. K. Poddar, learned Department Representative for the Revenue.

3. It is submitted on behalf of the appellant that the refund claim was actually filed on 31.07.2012 which was partially sanctioned vide order of Assistant Commissioner dated 03.10.2013 and was finally sanctioned on 03.02.2016, since Department had taken almost four years to sanction the refund claim despite that the appellant was regularly and diligently appearing and complying with the directions of the Department. It is alleged that there was an intentional delay in processing the refund application at the Departments end. Resultantly, the appellant is entitled for the interest. IVRCL Infrastructure & projects Ltd. vs. Union of India reported in 2010 (257) ELT 33 (Bombay) has been relied upon. Also the case of SR Steel Limited vs. Union of India reported in 2004 (176) ELT 64 (Guj.) = 2003-TIOL-492-HC-AHM-CUS has been relied upon. It is, therefore, submitted that appellant be also held entitled for the interest. The order under challenge may be, therefore, set aside. The appeal is accordingly, prayed to be allowed.

4. Per contra, it is submitted on behalf of the Department that the rejection of interest is based upon the statutory mandate of Section 27 (1B) (c) of Customs Act, 1962. It is submitted that the Bills of Entry in the impugned case were reassessed by the concerned assessing group and communicated on 24.11.2015 and the refund claim was sanctioned on 3rd February, 2016 i.e. within three months from the date of reassessment. The entitlement of the appellant for interest has therefore rightly been denied. Appeal is accordingly, prayed to be rejected.

5. After hearing both the parties and perusing the record, we are of the opinion that the 13 bills of entry in the instant case were assessed provisionally at the time of clearances of goods i.e. during August, 2011 to January, 2012 for the respective Bill of Entry. The 8% of SED and CVD was paid by the appellant immediately thereafter. The application of refund dated 31.07.2012 was partly allowed as far as the amount of SED of Rs.14,52,929/- was concerned. However the refund qua CVD i.e. Rs.91,33,845/- was rejected. Being aggrieved of this rejection that an appeal was preferred by the appellant but the matter was remanded back for the fresh decision. Perusal of the said order shows that the refund of SED was nowhere being objected that a fresh application of refund for CVD amount of Rs. 91,33,845/- was filed on 11.08.2014, which was sanctioned vide Order in Original dated 03.02.2016. The perusal of said order shows that the order has nowhere questioned the sanction of the refund of 8% of SED i.e. Rs. 14,52,929/- It rather sanctioned the refund of CVD as well. However, without interest which order has been confirmed by the Order under challenge.

6. The perusal makes it abundantly clear that the refund claim was filed as back as 31.07.2012 and the subsequent application of refund dated 11.08.2014 was nothing but the continuation of the said previous application itself. The interest has been denied relying upon Section 27 (1B) (c) of Customs Act, 1962, which reads as follows:-

“(c) Where any duty is paid provisionally under Section 18, the limitation of one year shall be computed from the date of adjustment of duty after the final assessment thereof or in case of re-assessment from the date of such re-assessment.”

7. It is apparent that Section 27 as such is relevant for the claim of refund of duties, which reads as follows:

“Section 27: Claim for refund of duty:-

(1) Any person claiming refund of any duty or interest – (a) paid by him : or (b) Borne by him, may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy commissioner of Customs, before the expiry of one year from the date of payments of such duty or interest:”

8. The perusal makes it abundantly clear that the period of limitation of one year is for the person claiming refund. In the present case the application dated 31.07.2012 is within one year of the last Bill of Entry among 13 i.e. dated 05.01.2012. Even first Bill of entry dated 18.08.2011 fulfills the aforesaid limitation as applicable to the appellant. Section 27 (1B) prescribes the mode of computing the aforesaid period of limitation of one year. Thus, Sub-clause (c) thereof gives the extended time to the appellant and not to the Department. The refund claim herein was filed much prior to the date of final assessment of duty. Department is, therefore, opined to not to be entitled of any benefit out of Section 27 (1B) (c) of the Act, as apparently no fresh application after re-assessment / final assessment of SED as well as CVD was at all filed by the appellant. His refund application is the one dated 31.07.2012, which was filed within one year of the payment of duty as was provisionally assessed. Hence, to our opinion, no benefit of extended period of limitation can be made available to the Department. Department was otherwise liable to make an order on the refund application and in case the competent authority i.e. Assistant Commissioner of Customs or Dy. Commissioner of Customs is of the opinion that the amount is refundable. He may make an order accordingly, and the amount so determined mandatorily to be credited to the fund.

9. Section 27 (a) of the Customs Act says that if any duty ordered to be refunded under Sub-Section (2) of Section 27 to the applicant is not refunded within 3 months from the date of receipt of application under sub-section (1) of Section 27 they shall be paid to the applicant the interest at such rate as is mentioned in the said Section. As already observed above, the application for refund was filed on 31st July, 2012, another application in continuation thereof was filed on 11.08.2014. Reassessment was on 24.11.2015. Apparently, and admittedly, the amount of refund has been sanctioned but has not been refunded within 3 months from the date of receipt of the above mentioned application, Section 27 (a) being a statutory mandate upon the Department, we are of the opinion, that Department is liable to pay the interest on the sanctioned amount for the delayed period.

10. In view of entire above discussions, the order under challenge is hereby set aside. Appeal stands allowed.

(Order pronounced in the open Court on 24.06.2019)

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