The Delhi High Court has allowed a batch of 15 customs appeals concerning the classification and refund of duty paid on imported pressure relief valves, holding that the authorities and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) were not justified in denying the benefit of the principles underlying Section 14 of the Limitation Act, 1963, in circumstances where the legal position governing customs refunds was subsequently altered by the Supreme Court.
The bench of Justice Anil Khetarpal and Justice Shail Jain has observed that in the peculiar circumstances arising from the Supreme Court’s decision in ITC Limited v. Commissioner of Central Excise, Kolkata-IV, the authorities below ought to have applied the principles underlying Section 14. The appeals were consequently held to be within limitation and restored for consideration on merits.
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The dispute originated from the import of pressure relief valves by Senior India Pvt. Ltd. The goods had earlier been cleared under Customs Tariff Item (CTI) 8481 40 00. However, from September 2018 onwards, the importer declared the goods under CTI 8409 99 41 and paid customs duty at a higher rate, stating that this classification was adopted upon the insistence of the Customs authorities.
Fourteen Bills of Entry were assessed between September 2018 and February 2019. Two additional Bills of Entry were filed on March 15, 2019 and May 6, 2019.
The litigation that followed was not confined merely to classification. The central controversy eventually became one of limitation—specifically, whether the importer should receive the benefit of the principles underlying Section 14 of the Limitation Act after it had pursued a refund remedy in accordance with the law prevailing at the relevant time.
The High Court noted that, when the assessments were made, the binding legal position of the Delhi High Court was different from the position subsequently declared by the Supreme Court.
In Aman Medical Products Ltd. v. Commissioner of Customs, Delhi, the Delhi High Court had held that where there was no lis or adversarial assessment, failure to appeal against an assessed Bill of Entry did not prevent an importer from maintaining a refund claim under Section 27 of the Customs Act.
Subsequently, in Micromax Informatics Ltd. v. Union of India, the Court held that, in the context of Section 27 as amended with effect from April 8, 2011, a refund claim could be entertained even where the assessment had not previously been reviewed or modified in appeal.
These decisions constituted the binding jurisdictional law at the time relevant to the appellant’s refund claims.
Relying upon this prevailing legal position, the importer filed two refund applications on August 26, 2019, within the one-year limitation period prescribed under Section 27 of the Customs Act.
Refund File No. 285 concerned the two later Bills of Entry, while Refund File No. 286 concerned the remaining fourteen Bills of Entry. Deficiency memoranda were subsequently issued in both files on September 5 and September 12, 2019.
The crucial development came on September 18, 2019, when the Supreme Court delivered its judgment in ITC Limited.
The Supreme Court held that a refund claim could not be entertained unless the assessment or self-assessment was first modified in an appeal under Section 128 or under another applicable provision of the Customs Act.
This judgment fundamentally altered the legal premise on which the importer had filed its refund claims. The High Court specifically noted that the procedural basis upon which the importer had invoked Section 27 was no longer sufficient following the Supreme Court ruling.
Significantly, the importer did not remain inactive after the change in law. Within six days of the Supreme Court’s judgment, on September 24, 2019, it filed an application under Section 149 of the Customs Act seeking amendment of the fourteen Bills of Entry.
The application remained pending. At the same time, the importer responded to the deficiency memoranda and requested that the refund proceedings be kept in abeyance until the statutory proceedings for modification of the assessments were completed.
The Refund Authority subsequently rejected Refund File No. 285 by letter dated May 8, 2020, which was received by the importer on June 2, 2020. The refund was rejected as premature because the Bills of Entry had not been reassessed.
No corresponding order was passed in Refund File No. 286.
The importer thereafter filed Appeal Nos. 728-741/2020 under Section 128 of the Customs Act on August 31, 2020, accompanied by applications seeking exclusion of the period during which the refund proceedings had been pursued. The appellant relied upon the principles underlying Section 14 of the Limitation Act.
The Commissioner (Appeals), by a common Order-in-Appeal dated May 5, 2022, rejected the fourteen appeals as barred by limitation.
According to the High Court, the rejection was based principally on the erroneous premise that the refund application dated August 26, 2019 concerned only two Bills of Entry.
The High Court found that this factual premise was incorrect. Refund File No. 286 related to the other fourteen Bills of Entry, and a deficiency memorandum had also been issued in respect of that file.
The matter subsequently reached the CESTAT.
The High Court observed that the CESTAT’s Final Order dated November 13, 2024 initially proceeded on the basis of a supposed concession by the appellant’s counsel that the appeals were barred by limitation.
Although this recital was subsequently corrected by a Miscellaneous Order dated August 22, 2025, the dismissal of the appeals remained intact without an independent examination of the applications invoking the principles underlying Section 14.
The Court further noted that another CESTAT order dated January 7, 2026 relied upon its earlier decision in Vishal Video and Appliances Pvt. Ltd. v. Commissioner of Customs, even though that decision had subsequently been reversed by the Delhi High Court on January 24, 2025.
While deciding the limitation issue, the Delhi High Court considered the Supreme Court’s judgment in M.P. Steel Corporation v. Commissioner of Central Excise.
The Supreme Court had held that although the Limitation Act does not apply proprio vigore—that is, by its own force—to an appeal before the Commissioner (Appeals), the principles underlying Section 14 can apply to an appeal under Section 128 of the Customs Act.
Accordingly, where a litigant has pursued a proceeding bona fide and with due diligence, and that proceeding subsequently proves unsuccessful because of a jurisdictional defect or a cause of a similar nature without adjudication on merits, the qualifying period may be excluded while calculating limitation.
The Court emphasised an important distinction: Section 14 does not extend or condone limitation in the ordinary sense. Instead, it excludes a qualifying period from the computation of limitation.
After excluding that period, the appeal must still fall within the otherwise applicable limitation period.
The High Court, however, recognised that the appellant faced a technical difficulty because Refund File No. 286 constituted an original proceeding instituted on August 26, 2019.
Under the principles stated in M.P. Steel Corporation, where the abortive proceeding is itself an original proceeding, the period preceding its institution cannot ordinarily be excluded merely as time spent prosecuting that proceeding.
The Court therefore did not mechanically apply Section 14 to the entire period. Instead, it examined the peculiar circumstances created by the subsequent Supreme Court judgment in ITC Limited.
A significant factor in the Court’s reasoning was the conduct of the importer.
The High Court found that the importer had invoked the Section 27 refund remedy within the prescribed period, when that remedy was recognised as legally available under the binding jurisdictional decisions.
More importantly, immediately after the Supreme Court changed the legal position through ITC Limited, the importer acted within six days by invoking Section 149 for modification of the Bills of Entry.
It also responded to the deficiency memoranda and asked that the refund proceedings remain in abeyance until the assessment-modification proceedings were dealt with.
The Court therefore concluded that the appellant’s conduct disclosed neither negligence nor inaction.
The Court also relied upon the reasoning adopted by a Coordinate Bench in Vishal Video and Appliances Pvt. Ltd. v. Commissioner of Customs, ACC (Import), decided on January 24, 2025.
The Coordinate Bench had considered the effect of the ITC Limited judgment on refund proceedings that had been initiated when the earlier legal position prevailed.
The Delhi High Court clarified that although the factual circumstances in Vishal Video were not identical, the Coordinate Bench had adopted a broader principle: where the fundamental legal basis on which a refund remedy was pursued was subsequently altered by the Supreme Court, the litigant could be entitled to the benefit of the principles underlying Section 14.
The Court also addressed the absence of a formal rejection order in Refund File No. 286.
It held that this did not alter the outcome. Following ITC Limited, the refund proceeding could not independently result in the grant of refund without modification of the self-assessments.
The importer had itself requested that Refund File No. 286 remain in abeyance pending its Section 149 application. The formal rejection of Refund File No. 285 on June 2, 2020 effectively crystallised the same legal impediment.
The High Court held that insisting upon another formal order repeating the same legal position would amount to elevating form over substance.
On a cumulative assessment of the circumstances, the Court adopted a nuanced approach.
It held that the period preceding August 26, 2019 could not simply be excluded as time spent pursuing an original refund proceeding. However, that period could not be treated as ordinary inaction either, because the importer was entitled, under the binding law then prevailing, to invoke Section 27 as an independent refund remedy.
For the period after August 26, 2019, the Court held that the time spent pursuing the refund proceedings and invoking Section 149 was liable to be excluded on the principles underlying Section 14 up to June 2, 2020.
Consequently, for the limited purpose of the present cases, limitation was required to be computed from June 2, 2020.
The High Court found another statutory factor relevant to the limitation calculation.
After exclusion of the period up to June 2, 2020, the initial 60-day limitation period under Section 128 would have expired on August 1, 2020.
However, that date fell within the period covered by Section 6 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, read with Notification G.S.R. 601(E) dated September 30, 2020.
The notification specified December 30, 2020 as the end of the covered period and extended the time for completion or compliance to December 31, 2020.
The Court noted that Section 128 of the Customs Act was not among the provisions excluded from the operation of the relaxation.
Since the appeals were filed on August 31, 2020, they were therefore within the statutorily extended period. The Court held that there was consequently no question of condoning any further delay.
The underlying Appeal had been filed on June 6, 2019, challenging the assessment of Bill of Entry No. 3119681 dated May 6, 2019, which had been given out-of-charge on May 9, 2019.
The appeal had been filed within 28 days and was therefore clearly within the limitation prescribed under Section 128.
The High Court held that the CESTAT’s dismissal of the subsequent Customs Appeal No. 52100/2022 as time-barred was manifestly erroneous and answered the additional substantial question of law in favour of the importer.
Importantly, the Delhi High Court did not decide the underlying classification dispute concerning the pressure relief valves.
The Court noted that the CESTAT, by Final Order No. 50018/2026 dated January 7, 2026, had classified the same pressure relief valves under CTI 8481 40 00.
That order, however, was not under challenge in the present batch of appeals. The High Court therefore expressly declined to express any opinion on the classification issue or the finality of that decision.
The parties were left free to raise the applicability of that order before the respective appellate authorities.
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