2018 (8) TMI 907 - AT - Customs

Refund of the security deposit - denial of refund on the ground that the appellant has not preferred appeal against the imposition of redemption fine and penalty. Held that - The adjudicating authority has correctly imposed redemption fine as well as penalty. Only after passing the order, the appellant can chose to redeem the goods or waive the option to redeem the goods. In such circumstances, after passing the order, the appellant has chosen not to redeem the goods and filed refund claim for balance security deposit. The security deposit is not in the nature of duty or interest. It is only an amount paid by the appellant as a security for the dues that may arise in case of adjudication proceedings. Since the appellant has not opted to redeem the goods, the balance amount after adjusting the penalty has to be returned to the appellant. Rejection of refund not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim for balance security deposit after imposition of redemption fine and penalty; Rejection of refund claim by department; Appeal against rejection of refund claim; Time-bar for filing refund claim.

Analysis:
The case involved a dispute regarding a refund claim for a balance security deposit after the imposition of a redemption fine and penalty. The appellant, a vessel, did not declare possession of a Thuraya Satellite Phone upon arrival at Tuticorin Port. Subsequently, the phone was seized, and a cash security deposit of ?1,32,000 was paid for provisional release. The adjudicating authority later confiscated the phone and allowed redemption on payment of the fine and penalty. The appellant did not appeal this decision as they did not intend to redeem the goods but instead filed a refund claim for the balance amount. The claim was rejected by the department, citing the lack of an appeal against the original order and ambiguity on how the balance amount should be adjusted. The Commissioner (Appeals) upheld the rejection, adding that the claim was time-barred.

During the proceedings, the appellant argued that since they did not wish to redeem the goods, the entire balance amount should be returned to them after adjusting the penalty. They contended that the security deposit was not akin to duty or interest and thus not subject to time-bar restrictions. The department, represented by the ld. AR, maintained that the appellant should have appealed the original order if they sought a refund and that the rejection was justified due to the lack of clarity on adjustment instructions and the claim being beyond the limitation period.

After hearing both sides, the Member (Judicial) analyzed the situation and disagreed with the department's reasoning. It was noted that the appellant had the option to redeem the goods or forego it after the order was passed. As the security deposit was merely a precautionary measure for potential dues, not duty or interest, the Member concluded that the balance amount should be returned to the appellant. The rejection of the refund claim was deemed unjustified, and the impugned order was set aside, allowing the appeal with any consequential relief.