Officials can’t override provisions by a circular: High Court

In an order that would bring cheer to importers, the Madras High Court has struck down a circular of the Central Board of Excise and Customs of April 2008 by which interest on delayed refund of four per cent additional Customs Duty was denied.

Allowing a petition seeking to quash the circular insofar as it sought to obliterate the claim of interest on belated refunds granted in terms of a September 2007 notification, Justice R. Sudhakar said the petitioner was justified in filing refund application and that was not in dispute. However, no order had been passed so far and the court had already directed the authorities to process the refund application.

In such a situation, the circular had been challenged. On a perusal of the circular, it was evident that the board was of the view that there was no specific provision for payment of interest in the September 14, 2007 notification. That reason was not correct.

P.H. Arvindh Pandian, senior counsel, appearing for the petitioner, KSJ Metal Impex (P) Ltd., Kilpauk here, contended that refund of duty or interest should be made within one year from the date of payment of duty. That had been made, but there was undue delay and hence the department should refund with interest consequent to delay.

Mr. Justice Sudhakar said when Section 27 of the Customs Act provided for refund of duty and Section 27 A provided for interest on delayed refunds, the authority could not override the provisions by a circular and deny the right granted under the law.

Therefore paragraph 4.3 of the circular was contrary to statute and became totally inappropriate. When the circular was contrary to the provisions of Customs Act and Customs Tariff Act, it had to be struck down as bad.

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