2025-VIL-1111-ORI-CU
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CUSTOMS High Court Cases

Customs - Provisional assessment, Excess payment of duty, Delay in finalization of assessment, Interest on refund of excess duty paid - Revenue appeal against Tribunal order directed the Department to pay interest on the excess amount of Custom duty - Respondent paid the custom duty in excess on provisional assessment - The finalization of the assessment and refund of the excess amount took around 14 years, despite the CBIC manual specifying that provisional assessments should be finalized within 6 months - Whether the Tribunal had the power to grant compensatory interest on the delayed refund of the excess custom duty paid by the respondent - HELD – The Revenue has contended that Tribunal has no power to award compensatory interest under Section 27A of the Customs Act, 1962 - The excess amount was paid by the respondent and was retained by the Department for an unexplained inordinate delay of 14 years, despite the guidelines in the CBIC manual specifying a 6-month timeline for finalization of provisional assessments. The technical objections raised by the Department cannot prevail over the substantial justice in such cases, and the Tribunal was justified in awarding interest to the respondent. However, the Notification dated 12th September, 2003, where for the purpose of Section 27A of the Customs Act, the Government has fixed the rate of an interest at the rate of 6% per annum. Therefore, the order of the Tribunal is modified to the extent that instead of an interest at the rate of 12% per annum, the same shall be paid at the rate of 6% per annum from the date stated therein - The appeal is disposed of
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