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TMI Blog2025 (3) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Customs (Refund) [2024 (9) TMI 1502 - MADRAS HIGH COURT] has observed that 'The amount that was collected by the Assessing Officer in view of the Special Valuation Branch (SVB) proceedings are nothing to ['to' here is to be read as 'but'] deposit and not a customs duty as is contemplated under Section 12 of the Customs Act, 1962, although such deposit were eligible to be appropriated towards the duty liability of the petitioner after final assessment of the Bill of Entry.' A perusal of Section 27 would show that the same deals with refund of customs duty. It is abundantly clear that EDD is not in the nature of customs duty. The deposit of the EDD was itself to secure any customs duty which may have been later on found to be payable, due to the allegation of under-declaration - The impugned order holding that the refund application is beyond the limitation is, thus, untenable. Moreover, the impugned order itself acknowledges that the said amount is over and above with duty which was determined by the SVB. The Customs Department could not have rejected the prayer for EDD refund. Conclusion - The period of limitation for seeking refund of customs duty under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted the final assessment of the bills of entry on 15th November 2019, accepting the valuation submitted by the Petitioner. This, according to the Petitioner, had entitled them to claim the refund of EDD deposited post the provisional assessment. 7. In this regard, the Petitioner repeatedly sought a refund of the EDD that was deposited vide letters dated 23rd July, 2020 (received on 18th August 2020) and 5th January, 2021 (received on 12th January, 2021). However, the Respondent-Department refused the claim vide impugned Order-in-Original No.13/DS/PPG/2024 (hereinafter 'OIO') on the ground that the first claim for refund was received by the Department only on 18th August, 2020, and the same was beyond the one-year limitation period prescribed under Section 27 of the Customs Act, 1962. Hence, this petition has been filed seeking a refund of the said EDD. 8. Ld. Counsel for the Petitioner submits that Circular 05/2016-Customs dated 9th February, 2016 expressly clarifies that EDD is not a form of customs duty and the same is paid to the Customs Authority in the form of a security deposit. Once the final assessment is done, the amount cannot be withheld by the Customs Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customs department for the shipment received through following ports. The detailed information containing, ports, Bill of Entry, Challan & Bank details are attached here with and ports wise summary is below. Port SVB Duty Amount EDD (in INR) Received Balance Delhi Air 55,52,076 / - 14,30, 102 43,21,974 / - -14,30,102 /- Patparganj Delhi 10,72,986 10,72,986 NIL 10,72,986 /- Tughalakbad Delhi 34,04,556/- NIL 34,04,556/- NIL Total 102,29,618/- 25,03,088 77,26,530 /- 25,03,088 /- 13. The only ground on which the refund has been rejected is that the application made under Section 27 of the Customs Act, 1962 is beyond the period of limitation prescribed under the provision i.e., beyond one year. 14. Therefore the short question before us is whether EDD constitutes a payment in the nature of customs duty under the scope of Section 27 of the Customs Act, 1962. This issue is no longer res integra. Firstly, Circular No.5/2016-Customs dated 9th February, 2016, as submitted by the Petitioner, expressly clarifies that payment collected after provisional assessment for the release of goods shall be in the form of 'security deposit'. The relevant paragraphs of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be initially furnished by the importer is attached as Annexure D. The form of Bond to be used in a case where taking a Security Deposit becomes necessary is attached as Annexure E." 15. Despite this Circular, the Petitioner has had to deposit EDD at different points in time, the reasons for which are unclear. 16. The question, therefore, is as to whether EDD constitutes customs duty. This issue has been settled by various High Courts. Madras High Court in Nithin India Tech Ltd v. The Deputy Commissioner of Customs (Refund) (W.P.No.24813 of 2020) has observed as under: "1. In this writ petition, the petitioner has challenged the impugned Order-in-Original No. 84145 of 2021 (JOB No.83144/2021) dated 28.04.2021 passed by the respondent rejecting the Extra Duty Deposit (EDD) of Rs.1,16,71,430/- paid by the petitioner as refund claim. ********* ********* ********* 17(A). The amount that was collected by the Assessing Officer in view of the Special Valuation Branch (SVB) proceedings are nothing to ['to' here is to be read as 'but'] deposit and not a customs duty as is contemplated under Section 12 of the Customs Act, 1962, although such deposit were eligible to be appropriated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. Aggrieved of the said order, the revenue is before this court in appeal. 6. From the aforesaid facts it is clear that, the refund is not sought for the excise duty paid in excess of what was payable under law. The refund was sought in respect of the additional value insisted upon by the department being the value of technical knowhow and royalty. It was added to the excise duty payable. When the assessee authority held that the customs duty paid by the assessee was proper and no additional duty need be paid, they were under an obligation to refund this additional amount which was collected, which had no basis. In such circumstances, Section 27 is not attracted. That is the view taken by the appellate authorities relying on the judgment of the Tribunal earlier. Therefore, the impugned order is legal Sind valid and does not suffer from any legal infirmity which calls for interference, No substantial question of law arises for consideration Accordingly, appeal is dismissed". 18. The Coordinate Bench of this Court in the Petitioner's case itself, reported at Sentec (Supra); (2023 SCC OnLine Del 701), under similar circumstances, has observed as under:- "10. The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid ground. The authorities are fully aware of the orders passed by the Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 2020 (supra) and this Court cannot countenance the approach of the respondents to insist that the orders passed by the Supreme Court be necessarily quoted by applicants for availing their benefit. The respondents are bound to consider the orders passed by the Supreme Court notwithstanding that the same are not referred to by the applicants. 18. In view of the above, the impugned order dated 07.11.2022 is set aside. The respondent is directed to forthwith process the petitioner's request for refund within a period of two weeks from today. 19. The respondent shall also consider the petitioner's entitlement to interest in accordance with law." 19. A perusal of Section 27 would show that the same deals with refund of customs duty. It is abundantly clear that EDD is not in the nature of customs duty. The deposit of the EDD was itself to secure any customs duty which may have been later on found to be payable, due to the allegation of under-declaration. However, when the said allegation has been disproved and the Department has taken a view th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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