Jsw Steel Ltd vs Commissioner Of Customs (ii), Chennai

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I

Customs Appeal No.41996 of 2016

( Arising out of Order-in-Appeal No.C.Cus.II, No.761 & 762 / 2016 dated 11.08.2016
passed by Commissioner of Customs (Appeals II), Chennai)

M/s. JSW Steel Ltd. …. Appellant
JSW Centre,
Bandra Kurla Complex, Bandra (East)
Mumbai-400051.
VERSUS

Commissioner of Customs, … Respondent
Commissionerate-II,
Custom House, 60, Rajaji Salai,
Chennai-600 001.
And

Customs Appeal No.41997 of 2016
( Arising out of Order-in-Appeal No.C.Cus.II, No.761 & 762 / 2016 dated 11.08.2016
passed by Commissioner of Customs (Appeals II), Chennai)


M/s. JSW Steel Ltd. …. Appellant
JSW Centre,
Bandra Kurla Complex, Bandra (East)
Mumbai-400051.
VERSUS

Commissioner of customs, … Respondent
Commissionerate-II,
Custom House, 60, Rajaji Salai,
Chennai-600 001

APPEARANCE :
Shri Rohan Muralidharan, Advocate for the Appellant
Ms. Rajni Menon, Authorized Representative for the Respondent

CORAM :
HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON’BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)


FINAL ORDER Nos._40989-40987/2026


DATE OF HEARING : 23.03.2026
DATE OF DECISION : 04.09.2026

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Per: Shri Ajayan T.V.

These two appeals being interconnected and filed against a
common order in Appeal C.Cus II No.761 & 762/2016 dated 11.08.2016
passed by the Commissioner of Customs (Appeals-II) (impugned
orders), were heard together and are being disposed of by this common
order.
2. Briefly stated, the facts are that JSW Steel Limited (the Appellant/JSW)
had exported "Non Alloy Steel Slabs Export Prime Steel" (subject goods)
under ITC HS 72071290 on which export duty was leviable at the rate of
15% ad valorem vide notification No.66/2008-Cus dated 10.05.2008. The
subject goods were exported vide four free shipping Bills No.3066930
dated 25.06.2008, No. 3069912 dated 27.06.2008, No.3080903 dated
08.07.2008 and No.3084299 dated 11.07.2008 and no export duty was
assessed on these shipping bills. JSW paid export duty @ 15% of FOB
Price of the steel products exported. The CBEC, vide circular No.18/2008-
Cus dated 10.11.2008 clarified that a policy decision has been taken that
till 31.12.2008, the existing practice of computation of export duty and
cesses by taking the FOB price as the cum-duty price may be continued
and that with effect from 1st January 2009, the practice of computation
of export duty shall be changed and that for the purposes of calculation
of export duty, the transaction value, that is to say the price actually paid
or payable for the goods for delivery at the time and place of exportation
under Section 14 of the Customs Act, 1962 shall be the FOB price of such
goods at the time and place of exportation. The Circular also conveyed
that the opinion obtained from the Ministry of Law is that the decision on
the issue of procedure for calculation of assessable value for the purpose
of charging export duty is essentially a matter of policy on which decision
is to be taken by the administrative department. JSW contended that on
the basis of the Circular it had discovered that excess duty has been paid
and consequentially filed refund application dated 30.01.2009 for
Rs.1,61,96,066/- being the excess export duty paid in respect of the said
shipping bills. The refund application was rejected as time barred vide
OIO No.9927/2009 dated 05.11.2009. JSW preferred an appeal before
the Commissioner (Appeals) who vide OIA C.Cus No.387/2010 dated
03.05.2010 allowed the appeal, finding inter-alia, that the provisions of
Section 27 of the Customs Act, 1962 are not applicable and thus there is
no question of applicability of time limit prescribed there under and also
that the doctrine of unjust enrichment envisaged under Section 27 ibid

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would not come into play. Aggrieved by the OIA passed by the
Commissioner (Appeals), Revenue had preferred appeal before the
Tribunal and vide its Final Order No.40250/2014 dated 19.03.2014, the
Tribunal held that the Commissioner (Appeals) proceeded on the basis of
wrong facts and remanded the case back to the original authority to take
a decision upon examination of facts and the applicability of Section 27
of the Act, keeping all the issues open.
3. The original authority revisited the case as per the directions of this
Tribunal and vide Order in Original No.44746/2016 ordered for sanction
of refund amount of Rs.1,61,96,066/- being the excess export duty paid
by them. The refund was granted on the following grounds:
a) In the present case, irrespective of whether the said shipping bills
were originally assessed to export duty or not, the claimant
voluntarily paid export duty by calculating 15% of the FOB value
declared in the respective shipping bills. The consignments were
duly exported, and export proceeds were realized. Thus, it stands
confirmed that the goods were exported, and the corresponding
export proceeds have been realized.
b) Subsequent to issuance of the Circular dated 10.11.2008, a policy
decision was taken that, until 31.12.2008, the existing practice of
computing export duty and cesses by treating the FOB price as the
cum-duty price may be continued, and that all pending cases may
be finalized accordingly. Prior to this Circular, export duty and
cesses were computed by treating the FOB price declared by the
exporter as cum-duty price and working backwards. In view of this
circular, all the relevant cases were referred to the Export
Department for correction and computation of the appropriate
export duty, which the Export Department re-quantified
accordingly.
c) The cause of action for seeking refund arose only upon issuance of
the Circular dated 10.11.2008. The claimant filed the refund claim
on 30.01.2009, which falls well within one year from the date of the
Circular.
d) This case involves modification of the original assessment in light of
the said Circular concerning computation of value under Section 14
of the Customs Act, 1962 for levy of export duty. The duty earlier
paid under the then-prevailing method was corrected/modified by

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the Assistant Commissioner, Export, on 21.09.2015, and the correct
duty liability was recomputed as per Section 14 considering the
Circular instructions. Such correction amounts to a re-assessment,
bringing the case squarely within the ambit of Section 27(1B)(c) of
the Customs Act. Since the re-assessment occurred on 21.09.2015,
the limitation period commences from that date, rendering the
refund claim well within the statutory time limit.
e) The Export Group re-assessed the shipping bills based on the
Circular dated 10.11.2008 and in accordance with the directions of
the Tribunal dated 19.03.2014. This reassessment resulted in
quantification of excess export duty payment amounting to
Rs.1,61,96,066/-. The requirement of examining unjust enrichment
then arises. For this purpose, the claimant produced a Chartered
Accountant's certificate dated 13.10.2015.
f) Therefore, in view of the foregoing discussion, the Board's Circular
dated 10.11.2008, the Order of the Tribunal, the applicable case
law, the quantification carried out by the Export Group regarding
the correct duty payable, and the Chartered Accountant's certificate,
the claimant is found entitled to refund of excess export duty paid,
amounting to Rs.1,61,96,066/-.
4. Aggrieved, Revenue filed an appeal against the above Order-in-Original
on the ground that the Ld. Assistant Commissioner had wrongly applied
the provisions of Section 27 of the Customs Act to decide the aspect of
limitation of time in filing the refund claim. Revenue also contended that
the relevant date should have been taken as the date of payment of
export duty and not the date of re-quantification of duty. Simultaneously,
JSW also filed an appeal against the same Order-in-Original on the ground
that interest on the sanctioned refund had not been granted.
5. Subsequently, the Ld. Commissioner of Customs (Appeals) passed the
Impugned Order, allowing the appeal filed by Revenue and rejecting the
appeal filed by the Appellant, holding that the refund application
submitted by the Appellant was time barred under Section 27 of the
Customs Act. The pertinent findings in the Impugned Order are provided
below:
a) The refund claim filed by the Appellant was hit by limitation as
provided under Section 27 of the Customs Act as it stood effective
during the relevant period.

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b) As per Section 51 of the Customs Act, 1962, the proper officer
permits clearance and loading of goods for exportation only on
being satisfied that the duty, if any, assessed thereon has been
paid; the Let Export Order is granted only after ensuring such
payment. The contention that there was no assessment in the
present case is therefore not supported by the legal position.
c) The reliance placed by the Appellant on CC, Guntur v. Sameera
Trading Co., 2011 (264) ELT 578 (Tri.-Bangalore) is misplaced,
since that decision holds only that an error in computing export duty
by treating FOB value as assessable value instead of cum-duty
value can be corrected under Section 154 by re-assessing the
shipping bills under Section 17(4); it contains no discussion of
refund of excess duty paid after such re-assessment under Section
27.
6. Aggrieved by the Impugned Order, the Appellant, having filed Appeal No.
C/41996/2016 regarding the refund claim for the principal amount and
Appeal No. C/41997/2016 regarding the claim of interest, is now before
this Tribunal.
7. Shri. Rohan Muralidharan, the Ld. Advocate appearing for the Appellant
made his submissions on both the appeals, which as summarised in the
common written synopsis, raised the following grounds:
A. Limitation runs from the date of rectification of the Impugned
Shipping Bills
7.1. The refund claim under Section 27, as it stood during the period of
dispute, stems from payment of excess duty in pursuance of an order
of assessment; the limitation period is triggered only when an
amount is paid pursuant to such an order.
7.2 In the present case, the subject goods were exported vide duty-free
shipping bills and no export duty was assessed on the Impugned
SBs, a fact not in dispute. The amount paid by the Appellant was
recorded neither in the Impugned SBs nor in the Let Export Orders.
Until the assessment itself was rectified, the cause of action for a
refund claim under Section 27 could not have arisen.
7.3 The Appellant itself submitted a letter dated 24.11.2009 requesting
re-assessment of the Impugned SBs after the first Order-in-Original
was passed, confirming that the SBs remained unrectified during the
first round of litigation. They were ultimately rectified vide Note

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dated 21.09.2015 issued by the Customs Export Department, an act
amounting to assessment or re-assessment for the purposes of
Section 27. The impugned order recognizes the fact that during the
period of dispute, there was no separate provision for computation
of time limit in the case of re-assessment of duty.
7.4. Section 2(2) of the Customs Act, as then in force, expressly provided
that "assessment" includes re-assessment. The rectification carried
out vide the Note dated 21.09.2015 therefore constitutes a valid
reassessment under Section 27.
7.5. Accordingly, the cause of action for the refund claim arose only upon
reassessment of the Impugned SBs on 21.09.2015, when the excess
payment stood acknowledged. The refund application, filed even
prior to that cause of action, cannot be treated as time-
barred.Reliance is placed on Commissioner of Cus. (Import) v.
Indian Farmers Fertiliser Co-Op. Ltd., 2009 (243) E.L.T. 687
(Bom.) , Keshari Steels v. Collector of Customs, Bombay, 2000
(115) E.L.T. 320 (Bom.), affirmed 2000 (121) E.L.T. A139
(S.C.); and Principal Commissioner of Customs, New Delhi v.
Lava International Ltd., 2023 (3) TMI 25-CESTAT New Delhi .
B. Without prejudice, limitation runs from the date of the
Circular
7.6. Since the excess amount was paid under a mistake, Section 27
limitation is inapplicable, and limitation must instead be reckoned
under Section 17 of the Limitation Act, 1963, which postpones the
limitation period until discovery of the mistake. The Circular was
issued on 10.11.2008 and the refund claim filed on 30.01.2009. The
date of discovery of the mistake is therefore the date of the Circular,
and the claim is within time under Section 17 of the Limitation Act.
7.7 Reliance is placed on Parijat Construction v. Commissioner of
Central Excise, Nashik, 2018 (359) E.L.T. 113 (Bom.); Messrs
Aculife Health Care Pvt. Ltd. & Anr. v. Union of India & Ors.,
2025 (2) TMI 501 (Guj.); CCE Bangalore v. KVR Construction,
2012 (26) STR 195 (Kar.), maintained 2018 (14) GSTL J70
(S.C.); 3E Infotech v. CESTAT, Commissioner of Central Excise
(Appeals-I), 2018 (7) TMI 276 (Mad.) ; and Oil and Natural
Gas Commission Ltd. v. Commissioner of Customs, Central
Excise & Service Tax, Dibrugarh, 2025 (4) TMI 882 .

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C. Section 27 limitation does not apply in the absence of an
order of assessment
7.8. Section 27 provides for refund of duty paid in terms of an order of
assessment under Section 17(2) or 17(4). Under Section 16, the
applicable rate of export duty is the rate in force on the date of the
Let Export Order.
7.9. On a perusal of the hard copies of the subject shipping bills along
with let export orders, it is seen that no duty was assessed on any
of the shipping bills. Where no order of assessment has been passed,
the amount must be regarded as duty not assessed, and the Section
27 time limit does not arise.
D. The refund amount does not partake the character of "duty"
7.10.The term "duty" under Section 27 refers only to customs duty
leviable under the Act. The excess amount deposited by the
Appellant was never leviable, as evidenced by the Note dated
21.09.2015 clarifying the correct duty liability.
7.11. Article 265 of the Constitution provides that no tax shall be levied
or collected except by authority of law. An amount collected without
such authority is not "duty" and does not fall within the refund
provisions of the statute.
7.12.The Appellant paid Rs.12,43,69,827/-, of which only
Rs.10,81,73,761/- was actually leviable; the excess of
Rs.1,61,96,066/- was collected without authority of law, as
confirmed by the Note dated 21.09.2015, and the Section 27 time
limit accordingly does not apply. Reliance is placed on Joshi
Technologies International v. Union of India, 2016 (339)
E.L.T. 21 (Guj.); 3E Infotech v. CESTAT, 2018 (7) TMI 276;
Commissioner of Customs and Central Excise v. M/s. Credible
Engineering Construction Projects Ltd., 2024 (4) TMI 1041 ;
and ONGC v. Commissioner of Customs, Central Excise &
Service Tax, Dibrugarh, 2025 (4) TMI 882 .
7.13. It is accordingly submitted that the refund sanctioned to the
Appellant is in accordance with law, and the Impugned Order
rejecting the refund claim is liable to be set aside. It was also
contended that the appellant is entitled to interest which was not
sanctioned while allowing the refund.

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8. Ms. Rajni Menon, Ld. Authorised Representative for the Respondent
reiterated the findings in the Impugned Order. Ld. A.R. contended that
the Note dated 21.09.2015 cannot be regarded as a reassessment. It was
submitted that this was not a case of provisional duty paid under Section
18 so as to fall within Section 27(1B)(c), and that the Appellate Authority
had rightly held the refund to be barred by limitation.
9. Post-hearing, the Ld. Counsel for the Appellant submitted a decision of
the Hon'ble Madras High Court in Commissioner of Service Tax v.
Hardy Explorations, C.M.A No.3249 of 2019 dated 10.08.2026 , for
the proposition that where duty has been paid under mistake of law, the
statutory time limit does not apply.
10. We have heard the rival submissions and perused the materials on record.
11. To our mind, the two issues that arise for our determination are whether
the refund claim dated 30.01.2009 was time-barred under Section 27,
and, if not, whether interest is payable.
12. We find that the contentions of the appellant at Grounds B and D, as
noticed above, both seek to displace Section 27 limitation altogether,
Ground B via the contention that limitation runs from discovery of the
mistake and thus attracts Section 17 of the Limitation Act, 1963 and
Ground D via Article 265, namely, that an amount collected without
authority of law is not "duty". In our considered view, arguments
advanced on both these routes were foreclosed by the Nine-Judge Bench
in Mafatlal Industries Ltd. v. Union of India, 1996 INSC 1514 : (1997) 5
SCC 536 : 1997 (89) E.L.T. 247 (S.C.) . The Honourable Apex Court, in
its answer to the first question posed therein, has unequivocally held that
any claim for refund founded on mis-construction, mis-application, or
wrong interpretation of a provision of law, rule, notification or regulation
lies only under Section 27, and Section 72 of the Contract Act and, by
the same logic, Section 17 of the Limitation Act, cannot be used to import
an alternative limitation trigger ousting or ignoring that stipulated in a
self-contained statute. That bar is not confined to mistakes discovered
through a judgment in another assessee's case; it extends equally to a
purported mistake corrected pursuant to the Board's own Circular, as is
stated here, assuming arguendo that a mistake did occur in the first
place, of which we are not convinced for the reasons further stated infra.
The arguments in Grounds B and D, do not impress us and fail for the
aforesaid reasons.

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13. That apart, even independently, Ground B fails on its own facts. A plea
under Section 17 of the Limitation Act requires that the mistake was not
known, and could not with reasonable diligence have been known, until
the date relied on for discovery, here, the Circular dated 10.11.2008. It
is on record that the EDI system itself indicated the FOB value as the
cum-duty price at the time the subject shipping bills were filed in June–
July 2008, and that this was precisely the computation the Circular went
on to confirm as correct for the period up to 31.12.2008. If that figure
was before the Appellant at the point of export, the Appellant cannot be
said to have discovered in 2009 what the EDI system indicated in 2008
at the time of filing the Bills of entry. Thus, the actual or constructive
knowledge at the time of payment of duty is fatal to a discovery plea. The
Appellant's explanation, as noticed from the appeal records, that it paid
the higher, non-EDI figure at the insistence of Revenue, carries no
contemporaneous documentation, either by way of any memo, note,
letter, or endorsement evidencing any such insistence or any
correspondence in writing by the appellant that it is paying such duty on
the verbal insistence of the authorities. In fact, the duty has been paid
without demur. The burden of establishing both the mistake, and the date
of its discovery, lies on the party invoking Section 17. To our mind, such
an unsupported assertion of oral pressure, which continued to be
reflected in the written submissions in the denovo proceedings, i.e., that
though no duty was assessed, the appellant was required to pay export
duty on the goods exported @ the rate of 15% on the FOB value, can
then be considered only as an assertion advanced merely to locate a later
discovery date. It does not discharge that burden of establishing the
mistake and the date of its discovery. If anything, the absence of any
record suggests the higher payment was the Appellant's own
computational choice in 2008, and not a mistake first discovered in 2009.
Ground B accordingly fails on facts as well as in law.
14. As we had observed supra, the decision in Mafatlal Industries, held that
the theory of mistake of law, and the limitation under Section 17 of the
Limitation Act, cannot be invoked to bypass a self-contained refund
provision such as Section 27. It was also held that Article 265 furnishes
no independent route to refund for amounts collected by
misinterpretation of a provision, as distinct from amounts collected under
a provision later declared unconstitutional. The Judgement of the Apex
Court in Escorts Ltd. v. Union of India, 1998 (97) E.L.T. 211 (S.C.),
submitted by the Appellant, in a customs case, confirms that a specific

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limitation provision such as Section 27 displaces the general law,
distinguishing Shri Vallabh Glass Works Ltd. v. Union of India, (1984) 3
SCC 362 , on the ground that no such dedicated provision existed in that
case. This Bench applied the same reasoning in M/s. Metec
Construction Technology Pvt. Ltd. v. Commissioner of GST and
Central Excise, Final Order No.40761/2025 dated 24.07.2025 ,
following Veer Overseas Ltd. v. CCE, Panchkula, 2018 (15) GSTL 59 (Tri-
LB), ONGC v. Commissioner of GST & Central Excise, Tiruchirappalli, 2024
(6) TMI 1417-CESTAT Chennai (LB), and Enmaz Andritz Pvt. Ltd. v.
CESTAT, Chennai, 2017 (6) GSTL 12 (Mad.) . Judicial discipline ordinarily
binds this Tribunal to its Jurisdictional High Court over any coordinate
forum; but where that ruling appears to conflict with the binding ratio of
a larger Bench of the Hon'ble Supreme Court under Article 141, whether
the two can be harmonised, or whether the High Court decision was
rendered without the benefit of paragraphs 66 to 99 of Mafatlal
Industries, is not a question to be settled in passing. Given that Ground
B fails independently on the facts set out above, the post-hearing citation
of Commissioner of Service Tax v. Hardy Explorations, C.M.A
No.3249 of 2019 dated 10.08.2026 (Mad.) as well as the other
decisions in similar vein relied upon by the appellant; do not call for
resolution even at the level of conflict with Mafatlal Industries. The
question thus not arising on these facts, we are disinclined to pronounce
on the same and have decided the appeals on other valid grounds that
disposes them of.
15. Ground A does not seek to escape Section 27 limitation but argues that
the limitation period ought to be computed from the date of rectification
of the shipping bills vide note dated 21.09.2015 issued by the Customs
Export Department. In Ground C the argument goes that there is no order
of assessment passed under Section 17(2) or as the case may be under
Section 17(4), and thus being a case of pending assessment the question
of applying the time limit under Section 27 does not arise. On
examination, however, the record does not support the Appellant's
submission, as raised at Ground C, that no assessment whatsoever took
place on the subject SBs. It is on record that the Let Export Order was
granted only after payment was made by challan. Under Section 51 of
the Customs Act, as it then stood, the proper officer permits clearance
only on being satisfied that duty "assessed thereon" has been paid.
Clearance conditioned in this manner is not consistent with an entirely
unassessed shipping bill; it indicates that the proper officer treated some

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duty figure as due and satisfied before granting LEO. To that extent, the
Impugned Order's reliance on Section 51 has force, and it is difficult for
us to accept the sweeping contention at Ground C that no assessment
occurred at all, as that goes further than the facts of this case allow. That,
however, does not disturb the outcome and in fact it narrows it. The only
figure that can be said to have been assessed, in the sense of having
been arrived at through the proper officer's satisfaction, is the amount
the EDI system itself indicated, the cum-duty computation, which was
the practice in vogue as later confirmed by the Circular. The excess
amount actually paid by challan, over and above that indicated figure,
finds no reflection in the subject SBs, the Let Export Orders, or any other
contemporaneous assessment record. Nothing on record shows the
proper officer examining, requiring, or assessing this additional amount.
Its existence as excess duty comes to light only through the Note dated
21.09.2015. It is this excess, not the duty liability as a whole, that
remained unassessed until that Note, and it is only in respect of this
excess that Grounds A and C have some force.
16. Section 2(2) of the Customs Act, as then in force, defined "assessment"
to include "reassessment". The Note dated 21.09.2015, recomputed the
duty consistent with the Circular dated 10.11.2008 and pursuant to this
Tribunal's remand. The cause of action therefore arose, at the earliest,
on 21.09.2015. The refund application dated 30.01.2009, read with the
correction sought by the Appellant vide its letter dated 24.11.2009 that
remained on record and was revived by that reassessment, cannot be
treated as time-barred. The said Note dated 21.09.2015 therefore in our
considered view, is a reassessment within Section 27(1B)(c). Therefore,
in view of the decision in Commissioner of Cus. (Import) v. Indian
Farmers Fertiliser Co-Op. Ltd., 2009 (243) E.L.T. 687 (Bom.) , that
till the assessment order is rectified, the question of refund would not
arise, and further holding that the refund claim having been made prior
to the rectification, it could not be said to be time-barred, and given that
the fact situation herein being similar, we hold that in the instant case
too, the refund claim could not be said to be time barred. The decisions
in Keshari Steels v. Collector of Customs, Bombay, 2000 (115)
E.L.T. 320 (Bom.), affirmed 2000 (121) E.L.T. A139 (S.C.), and
Principal Commissioner of Customs, New Delhi v. Lava
International Ltd., 2023 (3) TMI 25-CESTAT New Delhi , would also
support our aforesaid view. Our opinion is also not in conflict with the
Apex Court decision in ITC Ltd. v. Commissioner of Central Excise,

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Kolkata-IV , 2019 (368) E.L.T. 216 (S.C.). That decision bars a refund
officer from re-opening a final, unchallenged assessment by way of a
refund claim. However, we are of the considered view that the said
decision has no application to an amount that was never part of any
assessment to begin with, and whose correction, unlike a unilateral
refund-stage recomputation, was carried out by the departmental Export
Group itself, pursuant to this Tribunal's remand. We are therefore of the
firm opinion that the Ld. Commissioner (Appeals) erred in reckoning
limitation from the 2008 date of payment rather than from the date of
reassessment. That finding, and the Revenue's contention’s in support
thereof, cannot be sustained.
17. We also notice that the Order-in-Original separately examined and
accepted the Appellant's Chartered Accountant's certificate dated
13.10.2015 on unjust enrichment. This finding was not disturbed in the
Impugned Order, which rested solely on limitation, and nothing has been
urged before us to disturb it.
18. In view of our aforesaid analysis and for the reasons given above, we
hold that the refund claim was not time-barred. Order-in-Original
No.44746/2016, sanctioning refund of Rs.1,61,96,066/-, was correctly
passed. The Impugned Order, to the extent it allows the Revenue's appeal
and rejects the Appellant's, is set aside. Appeal No. C/41996/2016 is
allowed.
19. As regards the Appeal No.C/41997/2016, we find that in Ranbaxy
Laboratories Ltd. v. Union of India, 2011 (273) E.L.T. 3 (S.C.) , construing
the pari materia Section 11BB of the Central Excise Act, 1944, the Hon'ble
Supreme Court held that interest on a delayed refund runs from expiry
of three months from the date of receipt of the refund application and not
from the date of the order sanctioning refund, and unaffected by the
pendency of appellate proceedings. Thus, the law is settled that Revenue
cannot escape interest liability merely because its own wrongful rejection
of an otherwise ascertained claim occasioned appellate proceedings and
consequent delay.
20. However, we are of the considered view that such a premise does not
translate, without modification, to the present facts. Our finding recorded
above on limitation rests on the basis that the cause of action for this
refund, i.e. the ascertained existence of an excess payment of
Rs.1,61,96,066/-, did not arise until the Note dated 21.09.2015. It was
for that very reason that the application dated 30.01.2009, filed before

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any such ascertainment, could not be treated as time-barred. That same
finding cannot be set aside for the purpose of computing interest. Section
27A fastens interest liability where a refund "ordered" is not paid within
three months of receipt of the application, and presupposes an application
for an ascertained, presently refundable sum, with the intervening period
attributable to departmental delay in disposing of it. Prior to 21.09.2015,
there was no ascertained sum for the Department to have refunded, and
no delay on its part in refunding one. The delay lay in the reassessment
itself becoming necessary and being carried out, not in any default
following receipt of a complete claim. To fix the interest clock at
30.01.2009 while fixing the limitation clock at 21.09.2015 for the identical
cause of action would be to hold, in the same order, that the claim was
both premature and overdue at the same moment and is therefore an
inconsistency this Tribunal declines to introduce. Ranbaxy, properly
applied on these facts, requires interest to run from 21.09.2015, the
same date fixed as the relevant date under Section 27(1B)(c).
21. We therefore hold that interest under Section 27A is accordingly payable
on Rs.1,61,96,066/- from the date immediately following the expiry of
three months from 21.09.2015, that is, from 22.12.2015, until the date
of actual refund, at the notified rate. Appeal No. C/41997/2016 is allowed
to this extent.
22. In sum, the Impugned Order dated 11.08.2016 is set aside. Order-in-
Original No.44746/2016 stands restored, with interest to be computed
and paid as directed in paragraph 21.
The appeals are allowed in the aforesaid terms, with consequential relief
in law.
( Order pronounced in open court 04.09.2026 )


(AJAYAN T.V.) (VASA SESHAGIRI RAO)
Member (Judicial) Member (Technical)

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