2016 (9) TMI 1339 - AT - Customs

Refund claim - Section 27(1) of the Customs Act, 1962 - rejection on the ground that as per the proviso (3) to Section 26A ibid, no refund of custom duty on the imported goods shall be granted in case an offence has been committed at the time of import - Held that - it is evident from the fact of this case that the subject goods were not cleared by the Department for home consumption. Hence, the duty paid on such goods should be eligible for refund under Section 27 ibid - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for refund under Section 27 of the Customs Act, 1962.
2. Interpretation of the Third Proviso to Section 26A of the Customs Act.

Analysis:
1. The case involved a dispute regarding the appellant's refund claim under Section 27(1) of the Customs Act, 1962. The appellant had filed a Bill of Entry for home consumption of imported goods, but clearance was partially allowed by the Additional Commissioner of Customs. The appellant deposited duty on the goods but later sent them back to the Overseas Seller as they were not allowed for clearance. The refund application was rejected under the Third Proviso to Section 26A, which states that no refund of custom duty shall be granted if an offence has been committed at the time of import. The appellant contended that since the goods were not cleared for home consumption, the duty paid should be eligible for refund under Section 27. The Tribunal agreed, citing precedent where duty refund was allowed for goods not cleared for home consumption and re-exported by the importer.

2. The main issue was the interpretation of the Third Proviso to Section 26A. The appellant argued that the refund claim should be decided under Section 27 and not rejected under the Proviso to Section 26A. The Tribunal concurred, stating that the rejection under the Third Proviso was not in line with the statute. The Tribunal emphasized that the refund authority should have focused on the eligibility of the refund claim under Section 27, as the situation in this case differed from the circumstances covered by the Third Proviso. The Tribunal found no merit in the impugned order, allowing the appeal and granting consequential relief to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the duty paid on goods not cleared for home consumption was eligible for a refund under Section 27 of the Customs Act, 1962. The Tribunal set aside the previous order, emphasizing that the rejection under the Third Proviso to Section 26A was not in accordance with the statutory provisions.