Refund on Extra Duty Deposit should be automatic under the Customs Act

[CA Bimal Jain]

The CESTAT, Ahmedabad in the matter of CHINA STEEL CORPORATION INDIA PVT LTD VERSUS C.C. –AHMEDABAD [2022 (7) TMI 1128 - CESTAT AHMEDABAD] has held that the assessee would be entitle to automatic refund of Extra Duty Deposit (“the EDD”) without filing of application for refund under Section 27 of the Customs Act, 1962 (“the Customs Act”).

Facts:

M/s China Steel Corporation India Pvt Ltd (“the Appellant”) has engaged in import of Silicon Electrical Steel of Cold Rolled Full Hard (“the Goods”) from a related entity. The issue of valuation was taken up by the Special Valuation Brance (“the SVB”). EDD of 1% is to be provided as a safeguard for revenue and accordingly the Appellant had deposited EDD. The assessment was finally approved and EDD was paid by the Appellant and became refundable to them. The order accepting the declared value was passed on February 04, 2016 and refund claim was filed on January 24 , 2018. The Show Cause Notice (“the SCN”) was issued seeking to reject refund claim on the grounds of limitation. Aggrieved by such rejection, the Appellant filed the present appeal.

Appellant’s Contention:

• Such rejection was non-speaking and passed without application of mind.

• The duty was paid during the provisional assessment of the bills of entries, is only a security deposit and not a payment of duty and hence, Section 27 of the  Customs Act is not applicable.
• The decision of Hon’ble High Court of Bombay in the case of BUSSA OVERSEAS AND PROPERTIES PVT. LTD. VERSUS UNION OF INDIA - 2003 (9) TMI 90 - BOMBAY HIGH COURT (“the Bussa Overseas”) cannot be relied in the instant case, as the facts are totally different and also entitled to interest on delayed payment of refund of EDD.

Respondent’s Contention:

•  The assessment in the instant case was provisional till the same was finalised after the report of SVB was received. The assessment was finalized on receipt of the report of SVB.
• The decision of Hon’ble High Court of Bombay in Bussa’s Overseas, the provision under Section 27 of the  Customs Act are attracted.

Issue:

• Whether the Appellant is entitled to get refund of EDD paid by them during the assessment period?

Held:

The CESTAT, Ahmedabad in CHINA STEEL CORPORATION INDIA PVT LTD VERSUS C.C. –AHMEDABAD [2022 (7) TMI 1128 - CESTAT AHMEDABAD] has held as under:

• The decision of Hon’ble High Court of Bombay in the case of Bussa Overseas was passed in significantly on different set of facts.
• Relied upon the judgement of Hon’ble High Court of Madras in the matter of COMMISSIONER OF CUSTOMS (EXPORTS) CUSTOM HOUSE VERSUS M/S. SAYONARA EXPORTS PVT. LTD., CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL [2015 (3) TMI 861 - MADRAS HIGH COURT] wherein the decision was held in favour of the assessee and held that the Appellant would be entitled to automatic refund of EDD without filing of application for refund under Section 27 of the Customs Act.
• Further, held that, the Appellant was not even required to file refund claim and EDD should have been refunded without filing of refund claim and when the refund claim was filed by the Appellant, it cannot be treated as barred by limitation.

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