Micromax Wins Statutory Interest On ₹174 Crore CVD Refunds As Delhi HC Dismisses Customs Appeals

In brief

The question

1. Whether Micromax was entitled to statutory interest on the sanctioned refunds after the underlying refund amounts were held payable to it and not creditable to the CWF.

The court held

The Court held that Micromax was entitled to statutory interest on the refund amounts due to it.

It also directed

Finding no substantial question of law, it dismissed the appeals and disposed of the pending applications.

01Facts

Micromax imported cellular phones and mobile parts during September 2014 to March 2015, paying countervailing duty (CVD).

Following the Supreme Court’s decision in SRF Ltd. v. Commissioner of Customs, Chennai, Micromax sought refunds of the CVD paid.

The Assistant Authority sanctioned the refunds but directed that the amounts be credited to the Consumer Welfare Fund (CWF), and interest was subsequently denied by the Commissioner (Appeals).

pp. 5–6

The CESTAT set aside the denial of interest, holding that Micromax was entitled to statutory interest on the sanctioned refund amounts.

pp. 6–7

The Customs Department appealed.

The underlying decision that the principal refunds were payable to Micromax, rather than the CWF, had meanwhile been upheld by the High Court in connected appeals.

p. 7 · ¶ 10

The High Court also condoned delays in filing and re-filing the appeals.

p. 3 · ¶ 1–4

02Issues

i.1. Whether Micromax was entitled to statutory interest on the sanctioned refunds after the underlying refund amounts were held payable to it and not creditable to the CWF.

pp. 6–7 · ¶ 9–10

ii.2. Whether a substantial question of law arose warranting interference with the CESTAT’s order.

p. 7 · ¶ 10

03Law Applied

Section 27(2) of the Customs Act, 1962, provides for a refund to be credited to the CWF in the circumstances contemplated by that provision.

p. 6 · ¶ 6.3

The Court also referred to SRF Ltd. v. Commissioner of Customs, Chennai, (2015) 14 SCC 596, which held that CVD was not payable on the relevant imported goods.

p. 6 · ¶ 6.2

The Court applied the principle that where the principal refund is determined to be payable to the claimant rather than the CWF, the claimant is entitled to statutory interest on that refund in accordance with law.

p. 7 · ¶ 9–10

Provisions in the judgment · 1 · Linked ones open on LawLens

Customs Act,1962 Section 27

04Reasoning

The Department’s argument was that interest could not be payable because the original authority had directed the refund to the CWF and had not found Micromax entitled to the refund.

p. 6 · ¶ 7

That premise no longer held: in connected proceedings, the High Court had upheld the determination that the principal refund was payable to Micromax and not to the CWF.

p. 7 · ¶ 10

Given that development, the CESTAT’s conclusion that Micromax was entitled to statutory interest on the sanctioned principal amounts followed; the Department’s objection therefore did not survive.

pp. 6–7 · ¶ 9–10