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Judgment
Dr. Rachna Gupta, Member (J)
Present appeals are filed against the Order-in-Appeal No. 654-656/2022-23 dated 10.06.2022 vide which following order has been passed.
(i) For an amount of Rs.5,04,915/- interest is payable in terms of Section 27A of the Customs Act, 1962 at applicable rate for the period 09.12.2013 to 27.11.2019.
(ii) For an amount of Rs.4,14,316/- interest is payable in terms of Section 27A of the Customs Act, 1962 at applicable rate for the period 11.05.2014 to 27.02.2019.
(iii) For an amount of Rs.10,23,522/- interest is payable in terms of Section 27A of the Customs Act, 1962 at applicable rate for the period 11.05.2014 to 27.02.2019.
The said order has been passed against three Order-in-Original bearing Nos. 174/2022 dated 02.02.2022, 173/2022 dated
02.2022, 127/2021 dated 29.12.2021. Three of these orders were set aside by the impugned Order-in-Appeal. The facts in brief relevant for the present adjudication are as follows:
2.1 The appellant had filed a refund claim on 30.04.2021 with respect to the interest for delay sanction of refund amounting to Rs.5,04,915/-, Rs.4,14,316/- and Rs.10,23,522/- as was sanctioned vide Order-in-Original No. 141 dated 27.11.2019. The Original adjudicating authority of the department observed that the refund of Rs.5,04,915/-, Rs.4,14,316/- and Rs.10,23,522/-was sanctioned under Section 27A of the Customs Act which says that if any duty ordered to be refunded under sub-section (2) of Section 27 to an applicant is not refunded within three months from the date of receipt of application, there shall be paid to the applicant interest under proviso to Section 27A of Customs Act from the date immediately after three months from such date till the date of refund of such duty. Based on said provision, the claim of refund of amount of interest on principle amount sanctioned vide Order No. 141 dated 27.11.2019 was rejected by the original adjudicating authority. In an appeal against the said order, the Order-in-Appeal as quoted above has been passed. Still being aggrieved, the appellant is before this Tribunal.
We have heard Shri N.K. Sharma, learned Advocate for the appellant and Shri Rohit Issar, Authorized Representative for the department.
Learned counsel has mentioned that the imports, in question, were made in the year 2013 (during the period 01.05.2013 to 14. 07.2013) when the transaction value of imports declared by the appellant was enhanced by the assessing officer arbitrarily without any basis. The appellant had deposited the requisite differential Duty of Customs. This value enhancement was subsequently set aside by the Learned Commissioner (Appeals). The appellant submits that rejection of the value enhanced by the Assessing Officer demonstrates that the appellant was not required to make payment of the amounts of Rs.5,04,915/-, Rs.4,14,316/- and Rs.10,23,522/- at the time of imports made from 01.05.2013 to 14.07.2013. Hence these amounts retained by the Customs during all these years i.e. with effect from payment of the amount by appellant till the said demand got set aside i.e. from 2013 to 2019 should be treated as revenue deposit with the exchequer. The amounts deposited were ultimately refunded to the appellant vide Orders dated 27.11.2019, 27.02.2019 and 27.02.2019 respectively, but without awarding interest on the said amount despite that refund attracts payment of interest from the date of deposit. Resultantly, the appellant is entitled for interest on the said amount from the date of deposit till the refund of the said amount. The Order-in-Appeal under challenge is prayed to be set aside and the interest calculated at the rate of 12% on the amount already refunded is prayed to be sanctioned in favour of the appellant.
While reiterating no infirmity in the order under challenge, learned DR has prayed for dismissal of appeal.
Having heard the parties and from the appeal record, I observe that in the present case appellant had imported Polyester Spun Yarn during the period 01.05.2013 to 14.07.2013. The Assessing Authority at the time of assessment of said Bills of Entry loaded the value and assessed the Bills of Entry at enhanced value. The appellant paid the duty on assessed Bills of Entry and preferred three appeals before Commissioner (Appeals). Vide Order-in-Appeal Nos. 532 to 540/2013 dated 19.08.2013, Order-in-Appeal No. 798 to 801/2013 dated 23.12.2013 and Order-in-Appeal No. 358 to 362/2013 dated 10.06.2013, the reassessment at enhanced value was set aside. The assessment at the transaction value as declared by the appellant was affirmed. The three impugned refund claims of differential customs duty of Rs.5,04,915/-, Rs.4,14,316/- and Rs.10,23,522/- vide their refund applications dated 10.09.2013, 12.02.2014 and 12.02.2014 respectively were filed and those were sanctioned vide Order-in-Original No. 141 dated 27.11.2019, Order-in-Original No. 2069 dated 27.02.2019 and Order-in-Original No. 2070 dated 27.02.2019, however, without the amount of interest.
From the above facts, it is clear that the amount in question is an amount of differential duty of customs as was deposited by the appellant but was challenged by way of filing an appeal. This particular fact along with the fact that the those appeals were allowed in favour of appellant , is sufficient for me to hold that three of the impunged amounts, refunds whereof have already been sanctioned, were lying with the department as mere deposit since the date the amounts were being paid. Once the refund of these amounts have already been sanctioned, interest should have been paid there along to be calculated from the date of respective deposit till the date of disbursement of the said amount to the appellant. I observe that this issue is no more Res Integra. Tribunal in the case of M/s. Parle Agro Pvt. Ltd. Vs. Commissioner of Central Goods & Service Tax, Noida (vice-versa) reported as 2021 (5) TMI 870 - CESTAT ALLAHABAD. Though the matter is with respect to the duty of excise and deals with the provision relating to interest under Excise Act but it categorically holds that there is no provision in the Excise Act which deals with the refund of revenue deposit and so the rate of interest has not been prescribed for the deposit which is required to be refunded. Same is true even for the Customs Act. The Hon’ble Apex Court in its decision in SLP titled as Union of India Vs. Suvidhe Ltd. in which the decision of Hon’ble Bombay High Court in Suvidhe Ltd. Vs. Union of India reported as 1996 (82) ELT 177, has held that in case of deposits which are not in the form of duty, the provisions dealing with interest on the refund of duty will not be applicable. As already observed above, the amount in question in the present case is no more remains to be an amount of customs duty nor it is an amount of pre-deposit, the amount is merely a deposit with Revenue which Revenue has no authority to retain. The appellant being the owner of the said amount. As per Article 300A of the Constitution of India also, no person shall be deprived of his property, save by authority of law. Once the self assessed value of the appellant has been accepted, the differential duty which was already recovered from the appellant cannot be called as the amount of duty or the amount collected under the authority of law. It definitely is the property of the appellant which remained with the department since the day of the deposit.
The Hon’ble Apex Court subsequently in the case of Sandvik Asia Ltd. Vs. Commissioner of Income Tax-I, Pune reported as 2006 (196) ELT 257 (SC) has held as follows:
“45. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant’s money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are adversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 1978-79, it has been deprived of an amount of 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law.”
COMPENSATION:
The word Compensation’ has been defined in P. Ramanatha Aiyar’s Advanced Law Lexicon 3rd Edition 2005 page 918 as follows:
“An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury, the consideration or price of a privilege purchased; some thing given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer.”
In this case also Hon’ble Apex Court has held the assessee to be entitled to claim interest from the date of payment of initial amount till the date of its refund. Relying upon these decisions, as discussed above, I hold that the appellant herein is entitled to claim the interest on three of the amounts as have already been refunded to him. The interest shall accrue from the date of the payment of the said amount with the department.
I observe that Commissioner appeals also vide the order in question while relying upon the decision of this tribunal in the case of M/s S. S. Dyes & Chemicals reported as 2016 (331) E.L.T. 477 Tri. Mum. has held appellant entitled to interest however at applicable rates. Hence the issue of the rate of interest acquires importance. I observe that the only provision in the Customs Act dealing with interest is Section 27A. The rate prescribed under the said provision is between at the rate of 5% to at the rate of 30% per annum. Ld. DR has relied upon a Notification dated 12.08.2014 which has prescribed interest on refund to be fixed at the rate of 6% per annum. However appellant has brought to notice a subsequent notification no. 15/2016 dated 01.03.2016 vide which the Central Government has fixed the rate of interest at 15% per annum for the purpose of interest on refund of duty. Keeping in view the same and that section 27A of Customs Act prescribes a range of rate of interest to the maximum of 30% and also the facts of the present case, I do not find any unreasonableness in awarding the prayed rate of interest on the sanctioned amount paid consequent to assessed Customs Duty refunded when the said assessment stands already set aside and appellant is already held entitled by department itself, to get refund of said amount. Commissioner (Appeals) vide the order in question has even held appellant entitled for interest on the said amount.
Keeping in view the above discussion and the fact that the amount is lying deposited with the department since the Year 2013, I deem it to be a fit case for the interest to be awarded to the appellant on three of the amounts ( as mentioned above), already refunded , at the rate of 12% per annum to be calculated from the date of payment of the said amount till the disbursement thereof. Consequent to the entire above discussion, the order is hereby is modified to the extent as mentioned. The appeals stands accordingly disposed off.