2014 (3) TMI 12 - AT - Customs

Denial of refund claim - Refund of extra duty deposit - Applicability of Section 27 - Held that - impugned extra duty deposit has been collected as a form of security. Though the department contends that such deposit has to be treated as duty, such a bland contention cannot be accepted to deny refund of the security amount which has been deposited by the appellants at the time of provisional assessment - extra duty deposit appears to be more in the form of a security and not in the nature of duty. Hence the lower appellate authority applying the Board s circular issued in the case of refund of pre-deposit to a case of refund of extra duty deposit cannot be faulted. Hence the impugned order requires no interference - Decided against Revenue.

Summary

Issues involved: Refund of extra duty deposit; Interpretation of Section 27; Nature of extra duty deposit.

Analysis:
1. Refund of extra duty deposit: The lower appellate authority allowed the refund of extra duty deposit, stating that Section 27 does not apply to such refunds. The authority relied on a circular issued by the Board in 2002, following a Supreme Court decision related to a case from the Bombay High Court. The deposit in question was collected as a form of security during provisional assessment. The department argued that the deposit should be treated as duty, but the appellate authority disagreed, considering it more of a security amount based on the fixed rate of 5% collected pending the submission of required documents.

2. Interpretation of Section 27: The appellate authority's decision was based on the interpretation that the extra duty deposit was akin to a security amount and not duty. This interpretation was supported by the nature of the deposit and the circumstances under which it was collected. The authority found that the Board's circular on refund of pre-deposit was applicable to the case of refund of extra duty deposit, as it was more in the form of security rather than duty. Consequently, the authority dismissed the department's appeals, affirming the refund of the extra duty deposit.

3. Nature of extra duty deposit: The key point of contention was whether the extra duty deposit should be considered as duty or security. The appellate authority rejected the department's argument that it should be treated as duty, emphasizing that it was collected as security during provisional assessment. The fixed rate of 5% and the requirement for additional documentation indicated that the deposit was more in the nature of security. This understanding led to the conclusion that the refund of the extra duty deposit was justified under the circumstances, as confirmed by the learned DR and supported by the Board's circular on refund applications under Section 27.

This comprehensive analysis highlights the key aspects of the judgment, including the interpretation of relevant legal provisions, the nature of the deposit in question, and the application of circulars and precedents in arriving at the decision to allow the refund of the extra duty deposit.