2021 (8) TMI 312 - HC - Customs

Refund claim towards excess custom duty paid - excess amount paid through oversight and bonafide mistake - section 27 of the Customs Act - HELD THAT - The amount of ₹ 17,25,172/-, which was paid on second day i.e. on 12/04/2016 was not paid towards any custom duty but the amount again paid, which is already paid on earlier date i.e. on 11/04/2016 and therefore, it cannot be treated as duty and therefore, in our opinion, an excess amount paid by the petitioner, which the authority is not entitled to retain and needs to be refunded to the petitioner - The petitioner made an application within reasonable time and on that ground also, he would be entitled for refund of excess payment of customs duty. The petitioner is entitled to get refund of ₹ 17,25,172/- along with interest @ 6 % per annum from 01/05/2018 till the amount is paid. This rate of interest would be applicable, if the amount is paid within a period of three months. If the amount is not paid within a period of three months, the respondent is liable to pay interest @ 12% per annum subsequent thereof - Petition allowed.

Summary

Issues Involved:
1. Refund of excess customs duty.
2. Applicability of limitation period under Section 27 of the Customs Act.
3. Entitlement to interest on the refund amount.

Issue-wise Detailed Analysis:

1. Refund of Excess Customs Duty:
The petitioner, a company engaged in manufacturing, exports, and imports, mistakenly paid an excess amount of ?17,25,172/- as customs duty on 12/04/2016. This amount was already paid on 11/04/2016 for a different consignment. The petitioner sought a refund of this excess amount under Section 27 of the Customs Act, 1962, arguing that the payment was made by mistake and should not be treated as customs duty. The court agreed, noting that the excess amount was not duty but a mistaken payment, and thus the authorities were not entitled to retain it.

2. Applicability of Limitation Period under Section 27 of the Customs Act:
The respondent authorities rejected the refund claim on the grounds of limitation, stating that the application was filed after more than one year from the date of payment. The petitioner argued that the excess payment was made by mistake and should not be subjected to the limitation period under Section 27. The court concurred, referencing the case of "Swastik Sanitarywares Ltd. Vs. Union of India," which held that amounts paid by mistake should be refunded irrespective of the limitation period. The court also cited the case of "M/s. Comsol Energy Private Limited," which stated that claims for refunds made within a reasonable time are valid. The court determined that the petitioner's application, made within two years, was within a reasonable time frame.

3. Entitlement to Interest on the Refund Amount:
The petitioner claimed interest on the refund amount under Section 27A of the Customs Act, which mandates interest if a refund is not made within three months of the application. The respondent opposed this, citing the case of "Joshi Technologies International," which denied interest on refunds. However, the court found that the petitioner was entitled to interest, referencing the case of "M/s. Comsol Energy Private Limited," where interest was awarded despite similar circumstances. The court ruled that the petitioner was entitled to a refund of ?17,25,172/- with interest at 6% per annum from 01/05/2018 until payment. If the amount was not paid within three months, the interest rate would increase to 12% per annum.

Conclusion:
The court ruled in favor of the petitioner, ordering the refund of the excess customs duty along with applicable interest. The judgment emphasized that payments made by mistake should be refunded without being subjected to the limitation period under Section 27 of the Customs Act. The petitioner was entitled to interest on the refund amount as per Section 27A, reinforcing the principle that authorities cannot retain amounts paid by mistake.