2011 (3) TMI 537 - AT - Customs

Refund - Time barred - Prima facie there seems to be an apparent conflict between the second proviso which states that the limitation of six months shall not apply where duty has been paid under protest and the fourth proviso which states that the time limit of six months shall apply from the date of a judgment/appellate order - In this case the protest was lodged by the appellants challenging the assessment made by the Department and claiming nil rate of duty - after the fourth proviso came into operation The appellants had only six months time from 24-5-2007 to file a refund claim - Decided against the assessee

Summary

Issues:
Refund claim rejection on the grounds of being time-barred due to delay in filing after payment under protest.

Analysis:
The Appellate Tribunal CESTAT, Chennai, heard the case where the original authority rejected the refund claim filed by the appellants for three Bills of Entry as time-barred. The lower appellate authority also dismissed the appeal against the Order-in-Original, leading to the current appeal. The consultant for the appellants argued that the time limit under Section 27 of the Customs Act, 1962 does not apply to amounts paid under protest. The consultant referred to the Departmental Manual supporting this argument. On the other hand, the SDR representing the respondent defended the impugned orders, stating that the protest automatically ends once the assessment dispute is resolved, and cited the provision under Section 27 regarding the time limit of six months from the date of the order of the appellate authority.

The Tribunal examined Section 27 of the Customs Act, 1962, which deals with refund of duty. The main provision requires a refund claim to be filed within six months from the date of duty payment. The second proviso exempts the limitation of six months if duty is paid under protest. The fourth proviso specifies that if duty becomes refundable due to a judgment or order, the limitation of six months applies from the date of such judgment. The Tribunal noted the apparent conflict between the second and fourth provisos but emphasized the need to interpret them harmoniously to avoid redundancy. The fourth proviso, effective from 11-5-2007, applies to the appellants' case where the lower appellate authority's order was issued on 24-5-2007, and the refund claims were filed on 21-2-2008.

The Tribunal concluded that once the assessment dispute was resolved in favor of the appellants by the lower appellate authority, the cause of the protest ceased to exist. The appellants were required to file refund claims within the prescribed time limit. As per the fourth proviso, the appellants had six months from 24-5-2007 to file the refund claim, which they failed to do. Consequently, the refund claim was deemed time-barred, and the orders rejecting the claim were upheld. The appeal by the appellants was dismissed by the Tribunal.