2014 (2) TMI 105 - HC - Customs

Denial of refund claim - Release the bank guarantee - Provisional release of the goods - Jurisdiction to raise demand - Application made u/s 27 - Held that - petitioner has concededly deposited ₹ 47,14,188/- at various point of time as against the duty demanded of ₹ 73,92,399/-. Eventually, the entire confirmed duty was held to be illegal and set aside. The order of the CESTAT dated 6.7.2011 has become final. The provision relied upon by the Deputy Commissioner, i.e., Section 27 indicates that refund applications are to be made before the expiry of one year. In the present case, the department s responsibility of ensuring refund in accordance with the Circular of 8.12.2004 existed and the said refund had to be made within three months of the date of the order, i.e., 6th July, 2011. The department did not do so, compelling the petitioner to approach it for refund on 11.8.2012. Even if the arguments of limitation were to be accepted, the department could not have summarily rejected the application having regard to the duty cast upon it to ensure refund within three months. Claim of an individual whose amounts are retained without authority of law to seek refund or restitution cannot be rejected merely on the application of Section 27 - Decided in favour of assessee.

Summary

Issues:
Claim for refund and release of bank guarantee by the petitioner from customs department.

Analysis:
The petitioner imported Palm Fatty Acid Distillate and faced differential duty claims by Revenue Intelligence Authorities. The petitioner appealed to CESTAT, which allowed the appeal on grounds of no evidence of undervaluation. The CESTAT set aside the demands and confirmed the petitioner's liability at a lower amount. The petitioner sought a refund of the deposited amounts, but the claim was rejected by the Deputy Commissioner citing a one-year limitation from the CESTAT's final order. The petitioner argued that the Circular of Central Board of Excise and Customs mandates refunds within three months of the final order, emphasizing compliance with judicial decisions.

The respondent contended that the rejection of the refund claim was final and that the petitioner had appellate remedies available. However, it was acknowledged that the CESTAT's order set aside the differential duty demand for which the petitioner had made deposits. The petitioner relied on the Circular of 8.12.2004, which directs the timely refund of pre-deposits made in favor of the assessee following judicial orders. The Circular emphasizes strict adherence to refund timelines and warns of disciplinary action for delays.

The court noted that the entire confirmed duty was deemed illegal and set aside by the CESTAT's final order. The department failed to refund the deposited amounts within the stipulated three months, compelling the petitioner to seek refund later. The court held that the department's duty to refund within the specified timeline was mandatory, and the rejection based on a limitation argument was unjust. Upholding the petitioner's right to seek restitution, the court directed the respondents to refund the amount with interest within four weeks. The court also ordered the return of documents held by the authorities during the proceedings against the petitioner.