2008 (3) TMI 148 - AT - Customs

Due to certain problem in the software being used in the EDI system, assessee wrongly paid the duty at the rate of 5% on all exempted goods (Integrated Circuits) - they claimed refund of the duty paid held that refund arising out of correction of clerical error is admissible under Section 154 even without filing the claim under Section 27

Summary

Issues:
Refund claim rejection on the grounds of being time-barred.

Analysis:
The case involved appeals against Orders-in-Appeals passed by the Commissioner of Custom (Appeals), Bangalore. The appellants, M/s. ISRO Satellite Centre, Bangalore, imported goods entitled to exemption under Notification No. 51/96. Due to a software problem in the EDI system, they mistakenly paid duty at 5% on exempted goods (Integrated Circuits) and later claimed a refund. The Revenue rejected the refund claim as time-barred, leading to the appeals. The Original Authority and the Appellate Authority upheld the rejection of the refund claim.

Upon review, it was found that the original Bills of Entry were filed on specific dates in 2003. The appellants had notified the discrepancies in duty payment in a letter dated 17-7-2003 and subsequently requested assessment at a nil rate of duty in later letters. The Appellate Authority rejected the refund claim citing time-bar limitations, as the provision of duty paid under protest should have been applied at the time of payment, not later. However, the appellants had to pay duty at 5% due to an EDI system glitch, and the mistake was promptly pointed out.

The Tribunal considered Section 154 of the Customs Act, which allows for the correction of clerical or arithmetical errors. The duty paid due to an error in the EDI system was viewed as a clerical error or arithmetical mistake, correctable at any time under Section 154. Refunds arising from such errors should not be time-barred under Section 27. Citing precedents like the case of Goa Shipyard Ltd. v. CC, ACC, Sahar, and Collector of Customs, Chandigarh v. Oswal Woolen Mills Ltd., the Tribunal held that refund claims due to clerical errors are admissible under Section 154 without the need for a separate claim under Section 27.

Ultimately, the Tribunal allowed the appeals, granting the appellants the benefit of the refund, as there was no merit in the Commissioner's decision. The judgment emphasized that technicalities should not hinder legitimate refund claims arising from clerical errors, and the time-bar should not impede correcting such mistakes.

This comprehensive analysis highlights the key legal arguments, precedents, and the Tribunal's decision in favor of the appellants based on the interpretation of relevant provisions of the Customs Act.