2023 (1) TMI 199 - AT - Customs

Rejection of refund claim - import of 54 sets of battery operated rickshaw in CKD condition without battery and charger - re-export of the goods as appellant did not have valid certificate of compliance in terms of Rule 126 of Central Motor Vehicle Rules (CMVR), 1989 - rejection of refund claim on the ground of time limitation - whether the time bar under section 27(1) of Customs Act, 1962 is invokable with respect to impugned refund claim? HELD THAT - It is observed that the opening line for section 27 is claim of refund of duty . Reverting to the facts of this case admittedly, the amount in question Rs 7,76,205/- was paid at the time of presentation of Bill of Entry on 03.01.2014 as duty on the goods / vehicles imported by the appellant. It is also admitted fact on record that those goods since were not allowed to be imported without any requisite certificate. Since the Certificate was not available with the appellant that the appellant made a request for the goods to be re-exported. Admittedly the request was made at the time when the goods were still in the Customs area. The Bill of Entry as was filed for home consumption was allowed to be amended for warehouse and those were allowed to be re-exported vide order dated 14.10.2014. The let export order was passed with respect to the goods which were still lying in the customs area on 22.11.2014. These admitted facts are sufficient admission to the fact that the goods were never cleared for home consumption. There was no occasion for the appellant to actually pay the customs duty. Hence the amount in question cannot be called as the amount of duty to which section 27 applies - The duty of Rs.7,76,205/- which stand deposited since at the stage prior to scrutiny of the impugned Bill of Entry, hence remained as deposit made by the appellant for which the department has no authority to retain. Resultantly, same cannot be called as amount of duty. The Commissioner (Appeals) has wrongly invoked section 27(1) of the Customs Act, 1962 while rejecting the refund claim as barred by time. Section 26A(1) is otherwise not applicable to the facts of the present case. The order is accordingly set aside - Appellant is held entitled for the said refund along with interest at the rate of 6% from the date of payment till the sanction arrived. Appeal allowed.

Summary

Issues:
1. Refund claim rejection upheld as time-barred under Customs Act, 1962.

Analysis:
The case involved an appeal challenging the rejection of a refund claim under the Customs Act, 1962. The appellant had imported battery-operated rickshaws in CKD condition without necessary certificates, leading to a request for re-export to a third country. The refund claim was filed after the re-export, seeking a refund of the customs duty paid. The claim was rejected as time-barred under section 27(1) of the Customs Act, 1962, and for being filed in contravention of Explanation A of section 26A(2) of the Act. The Commissioner (Appeals) upheld the rejection, leading to the appeal before the Tribunal.

The main issue for determination was whether the time bar under section 27(1) of the Customs Act, 1962 applied to the refund claim. The Tribunal analyzed the facts, noting that the goods were never cleared for home consumption, and the duty paid was deposited before the duty collection stage. Referring to constitutional provisions and legal precedents, the Tribunal concluded that the duty amount deposited could not be considered as duty under section 27. The Tribunal cited the decision in Jindal Stainless Ltd. vs. State of Haryana, emphasizing that once goods are re-exported, the importer is entitled to a refund of duty.

Further, the Tribunal relied on the decision in Garden Silk Mills Ltd. vs Union of India, highlighting that the taxable event occurs only after the goods reach the customs barrier and a Bill of entry for home consumption is filed. Applying these principles, the Tribunal held that the Commissioner (Appeals) wrongly invoked section 27(1) of the Customs Act, 1962, and set aside the rejection of the refund claim. The Tribunal ruled in favor of the appellant, granting the refund along with interest at the rate of 6% from the date of payment till the sanction was made.

In conclusion, the Tribunal allowed the appeal, emphasizing the entitlement of the appellant to the refund claim and interest. The judgment was pronounced on 04-01-2023 by Dr. Rachna Gupta, Member (Judicial) of the Appellate Tribunal CESTAT, New Delhi.