Delhi High Court Grants Importers Interest On Customs Duty Refunds After Delay In Re-Assessment By Department

The Delhi High Court has recently held that importers are entitled to interest on refunds of excess customs duty in cases where prolonged delay in reassessment is attributable to the Department.

A Division Bench of Justice Prathiba M. Singh and Justice Shail Jain observed, "For the delay in Department's passing of the re-assessment orders, the Petitioners cannot be blamed or expected to unduly suffer. Accordingly, the Court is of the view that in the said four writ petitions, the interest would liable to be paid to the Petitioners."

The court was dealing with petitions filed by Jaina Marketing & Associates, Lava International Ltd., and other importers who were denied interest despite receiving refunds of excess Countervailing Duty.

The judgment was reserved on September 24, 2025 and pronounced on March 30, 2026. It noted that while the Department claimed that refunds were granted within the prescribed time after applications were filed, the process of re-assessment itself had taken several years.

The dispute goes back to imports made between February 2014 and July 2015, when the importers ended up paying higher duty on mobile phones and related goods as the electronic system did not permit them to claim the concessional rate. They started seeking re-assessment around April 2015 and kept following up with the authorities over the years.

In several instances, re-assessment came only in June 2022, close to seven years later. Refund claims were then filed during 2022 and 2023, and amounts were eventually released in 2023. These included sums of over Rs 100 crore to Lava International Ltd. and more than Rs 145 crore to Jaina Marketing & Associates, though no interest was paid.

The importers argued that the excess duty was not payable at the higher rate and that they had been deprived of the use of their money for years due to delays entirely beyond their control. They pointed out that they had pursued their claims since 2015 and should not be penalised for administrative and system failures.

The Customs Department contended that interest is payable only if refunds are delayed beyond three months from the date of a refund application, and argued that the refunds in these cases were processed within that period.

Rejecting this stand, the court held that a strict application of the statutory timeline would not be justified in the facts. It noted that the delay occurred at the stage of re-assessment, which was within the control of the Department, and that the importers had consistently pursued their claims.

The court emphasised that denying interest in such circumstances would permit the State to retain money that was not lawfully due. It also recorded that the petitioners were not “fence sitters” and had been actively following up on their claims and therefore could not be made to suffer for delays on the part of the authorities.