2024 (9) TMI 1094 - HC - Customs

Refund of excess duty paid to the Customs Department alongwith Interest - rejection on the ground of being time-barred as per Section 27 of the Customs Act, 1962 - HELD THAT - A plain reading of Section 27 of the Customs Act, 1962 would reveal that a refund application must be made within one year from the date of payment. However, it does not specify that this limitation applies when the duty was paid by mistake. In similar circumstances, in respect of a service tax matter, the Division Bench of this Court, in 3E Infotech vs. CESTAT, Chennai 2018 (7) TMI 276 - MADRAS HIGH COURT , held that limitation period would not apply where the tax was paid by mistake. A combined reading of the aforesaid provisions viz., Section 11B of the Central Excise Act and Section 27 of the Customs Act would reveal that both the provisions operate in the same manner with respect to claims for refund of duties. They clearly stipulate that a refund claim must be made within one year from the date of payment, and the procedure to be followed for filing such claims. However, neither of the provisions explicitly addresses the ;situations under which the duty or tax was paid by mistake. The matter is remanded to the respondent for reconsideration. The respondent shall re-consider the application for refund filed by the petitioner after affording an opportunity of personal hearing and pass necessary orders within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.

Summary

Issues:
1. Refund of excess customs duty paid by petitioner.
2. Applicability of time limitation under Section 27 of the Customs Act for claiming refund.
3. Comparison of provisions of Central Excise Act and Customs Act regarding refund claims.
4. Interpretation of legal principle regarding refund claims when duty or tax was paid by mistake.

Analysis:
The petitioner sought to quash an order and direct the respondent to sanction a refund of excess customs duty paid along with interest. The petitioner imported consignments and paid duty twice due to a system error, but the refund application was rejected as time-barred under Section 27 of the Customs Act. The petitioner relied on a Division Bench judgment stating that time limitation does not apply when tax is paid by mistake. The respondent argued that the judgment pertained to service tax, not customs duty. The court noted that the Customs Act does not explicitly address refunds for payments made by mistake. The court cited Section 11B of the Central Excise Act, which mirrors Section 27 of the Customs Act, and emphasized that both provisions lack clarity on refunds for mistaken payments. Consequently, the court applied the legal principle from the Division Bench judgment, stating that time limitation does not bar refund claims for mistaken payments. The court set aside the order and remanded the matter to the respondent for reconsideration within four weeks.

This judgment addresses the issue of refunding excess customs duty paid by the petitioner and the applicability of time limitation under Section 27 of the Customs Act for claiming refunds. It compares provisions of the Central Excise Act and Customs Act regarding refund claims and interprets the legal principle regarding refund claims when duty or tax was paid by mistake. The court's analysis focused on the lack of explicit provisions in both acts concerning refunds for mistaken payments, leading to the application of the legal principle from a previous Division Bench judgment. The court's decision to set aside the order and remand the matter for reconsideration emphasizes the importance of clarity in refund procedures for mistaken payments under customs laws.