2008 (10) TMI 92 - AT - Customs

As there was a delay on part of World Bank in sanctioning loan, the Dept. pressed for payments by the appellants in terms of the DGFT s public notice coupled with Not. 36/97-Cus. - What was paid by the appellants was the cash equivalent of the duty of customs forgone by the Dept. as deemed export benefits - cash payment made by appellants should be treated as a deposit and claim for its refund should be entertained without reference to the time-bar provisions of S. 27 of the Customs Act

Summary

Issues:
1. Refund claim of customs duty time-barred or not.
2. Applicability of time-bar provisions in refund claims.
3. Treatment of cash payment made by appellants.
4. Interpretation of deemed export benefits and relaxation of time-bar provisions.

Analysis:
1. The appellants were involved in Power Project and Power Transmission Project financed by the World Bank. A delay in loan sanction led to the suppliers not availing Customs duty exemption. The DGFT issued a public notice extending deemed export benefits pending loan sanction. The appellants paid duty benefits as required by authorities. The World Bank later sanctioned the loan, and the appellants sought a refund, which was denied due to being time-barred.

2. The appellants argued that the duty payment was like a deposit until an adjudication order converted it into duty payment. They referred to a meeting decision relaxing time-bar provisions for World Bank-assisted projects. Similar refund claims were allowed at other customs stations. The Tribunal's past decisions favored the appellants, considering subsequent loan sanction.

3. The Department argued that all refund claims must adhere to statutory provisions, citing the Mafatlal Industries case. However, the Tribunal noted that the cash payment by the appellants was deemed export benefits foregone by the Department. The payment was made in anticipation of loan delay and treated as a deposit. The Department accepted similar cases where cash payment was considered under protest.

4. The Tribunal found in favor of the appellants, noting the acceptance of similar cases by the Revenue and the relaxation of time-bar provisions for projects with World Bank assistance. The cash payment by the appellants was seen as a deposit, refundable without reference to time-bar provisions. The decision was supported by past Orders-in-Appeal and the unique circumstances of the case. The Department's reliance on Mafatlal Industries was deemed irrelevant to the current scenario.

In conclusion, the Tribunal set aside the impugned order, allowing the appeals in favor of the appellants. The decision highlighted the unique nature of the cash payment, the relaxation of time-bar provisions for World Bank-assisted projects, and the treatment of the payment as a deposit rather than duty payment until adjudication.