2010 (5) TMI 472 - HC - Customs

Refund - limitation duty paid under protest SCN for its non-payment based on a CBEC circular - circular was quashed by this court Held that - not a case of erroneous deposit, but a deposit of duty in response to a show cause notice under protest - limitation the respondents could not refuse to refund - Since payment without any valid reason - respondents are directed to refund all amounts paid

Summary

Issues: Refund of countervailing duty, limitation period for refund, entitlement to interest on refund

In this judgment by the High Court of Calcutta, the petitioners were aggrieved by the order of the Commissioner of Customs (Appeals) directing a fresh decision on their refund claims under the Central Excise Act, 1944. The petitioners imported plastic for manufacturing plastic granules and paid countervailing duty under protest in response to a show cause notice. The circular on which the duty was demanded was later quashed by the court. The petitioners then applied for a refund of the duty, which was denied on the grounds of limitation. The Commissioner of Customs (Appeals) remitted the matter for a fresh decision under the Central Excise Act, 1944.

The counsel for the petitioners argued that the duty was paid under protest as a pre-deposit by way of security, and thus the respondents were obligated to refund the amounts without considering the limitation period. It was contended that interest should be paid from the date of deposit. On the other hand, the respondents' counsel argued that the authority to whom the matter was remitted had not given a decision yet. While acknowledging the quashing of the circular, the respondents disputed the petitioners' claim for interest from the date of deposit.

The Court held that the authority making the original order was incorrect in deeming the refund claims as time-barred and that the appellate authority was unjustified in remitting the matter for a fresh decision. It was established that the duty payment was a pre-deposit in response to the show cause notice and not an erroneous deposit. Therefore, the respondents were obligated to refund the amounts paid without considering the limitation period. As the respondents withheld payment without valid reason, they were liable to pay interest from a specified date.

Consequently, the Court allowed the petition, directing the respondents to refund all amounts paid as countervailing duty with interest at a specified rate from a specified date until the actual payment. The respondents were also instructed to release all provisional duty bonds within a specified timeframe. No costs were awarded in this judgment.