Delhi High Court Grants Interest on Delayed Customs Duty Refunds To Mobile Importers, Denies Relief To Lava

The Delhi High Court has held that mobile importers, including Intex Technologies (India) Ltd., are entitled to interest on refunds of excess customs duty paid by them.

A Division Bench of Justices Prathiba M. Singh and Shail Jain allowed a batch of writ petitions filed by multiple importers, including Jaina Mobile India, Intex Technologies, and UT Electronics (Petitioners), all of whom had been granted refunds of excess Countervailing Duty (CVD) but were denied interest.

However, no interest on refund was granted to Lava International, as there was no undue delay on part of the Department in re-assessing or processing the company's application.

Petitioners had imported mobile phones and related products between 2014 and 2016. Due to limitations in the ICEGATE electronic system, they were unable to avail the benefit of concessional duty and were compelled to pay higher CVD, in some cases under protest.

Following litigation and re-assessment of Bills of Entry, the Customs authorities eventually granted refunds running into hundreds of crores. However, the Department denied interest on these refunds, prompting the present writ petitions.

The High Court noted that the petitioners had consistently pursued their claims and were not “fence sitters.” It further noted that no interest had been granted, despite the refund orders being passed beyond the stipulated period of 3 months from the date of filing of refund applications.

Reliance was placed on SRF Ltd. v. Commissioner of Customs (2015), the Court observed that the petitioners were entitled to concessional duty and had effectively overpaid due to circumstances beyond their control.

“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 be liable to be paid to the Petitioners. It deserves to be noted that more than seven years elapsed from date of applications for re-assessment till date of order of refund,” it held.

Accordingly, the Court directed that interest be paid on the refunded amounts to Jaina Mobile India, Intex Technologies and UT Electronics.

So far as Lava is concerned, the Court said, “though at first blush, it clearly appears that the Respondents have enjoyed the amount deposited by the Petitioner. However, since the refunds have been granted to Petitioner within the three-month period, no interest would be liable to be paid.”

For Petitioner: Advocates Yogendra Aldak and Agrim Arora, Asha Jain Madan, Mukesh Jain and Ajay Goyal

For Respondents: SSC Anushree Narain, SSC with Advocates Yamit Jeitley and Naman Choula