Appellate Authority Can’t Direct Re-Examination of Refund Limitation When Timeliness Was Never Disputed by Dept.: CESTAT

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that an appellate authority cannot order a fresh verification of the limitation period for a refund claim when the timeliness of the application was never questioned by the department during the original proceedings. The bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that the Original Authority did not dispute the filing of refund application in time, the order of the First Appellate Authority to examine afresh the claim of refund in terms of Section 27, is clearly outside the scope of the very First Appeal since the Revenue did not even file counter nor did it dispute the date of filing of refund application. The appellant/assessee, M/s Bellary Iron Ores Pvt. Ltd., challenged an order of the Commissioner of Customs (Appeals) which had directed the adjudicating authority to verify whether the refund claim was filed within the limitation period prescribed under Section 27 of the Customs Act, 1962. The dispute arose after the appellant sought a refund of excess customs duty that had been paid following directions from the departmental audit team. The adjudicating authority had rejected the refund claim through an Order-in-Original dated October 16, 2015, holding that the assessee should have first sought rectification of the assessment order before filing a refund claim. The authority relied on the Supreme Court’s judgment in Priya Blue Industries Ltd. vs. Commissioner of Customs, which bars refund claims that indirectly challenge an assessment order without first seeking its modification. On appeal, the Commissioner (Appeals) disagreed with the adjudicating authority and observed that the authority itself should have rectified the mistake, particularly since the excess duty had been paid at the insistence of the revenue authorities. While setting aside the rejection order, the Commissioner nevertheless directed the adjudicating authority to verify whether the refund application had been filed within the time limit prescribed under Section 27 of the Customs Act. The appellant challenged this direction before the Tribunal, arguing that the issue of limitation had never been raised by the adjudicating authority and that the refund application had originally been filed on January 28, 2009, well within the statutory time limit. According to the appellant, directing a fresh verification of an undisputed fact was beyond the scope of the appeal. The Tribunal examined the records and noted that both sides had relied on Circular No. 18/2008-Cus dated November 10, 2008, which provides that the value of export goods should be determined by treating the FOB value as a cum-duty price. Although this principle had not been applied in the Order-in-Original, the Commissioner (Appeals) had accepted the position that there was an error in the computation of duty which led to excess payment. The Bench observed that the only undisputed fact in the case was the existence of an error in duty computation. It further noted that the records did not reflect proper consideration of the appellant’s refund application filed in 2009, which had explained the excess duty payment. The Tribunal pointed out that the adjudicating authority had never disputed the date of filing of the refund application and the revenue had not filed any counter or raised the limitation issue in the appellate proceedings. In such circumstances, directing the adjudicating authority to re-examine the claim under Section 27 was outside the scope of the appeal. The Tribunal therefore held that the direction to reconsider the limitation aspect of the refund claim was unsustainable in law and set aside that portion of the order. However, it allowed the remaining directions issued by the Commissioner (Appeals) to stand. Accordingly, the appeal was partly allowed and the impugned order was modified to the extent that the adjudicating authority was directed to implement the other directions without re-examining the limitation of the refund claim under Section 27 of the Customs Act. Case Details Case Title: M/s.Bellary Iron Ores Pvt. Ltd. Versus The Commissioner of Customs Citation: JURISHOUR-227-CES-2026(CHEN) Case No.: Customs Appeal No. 41044 of 2016 Date: 04.03.2026 Counsel For Appellant: M.S. Nagaraja, Advocate Counsel For Respondent: Anandalakshmi Ganeshram, Authorized Representative Click Here To Read Order Read More: Manufacturing Costs Of Other Items, Administrative Overheads Can’t Be Included In Production Cost For Valuation Of Goods Transferred To Sister Units: CESTAT

Appellate Authority Can’t Direct Re-Examination of Refund Limitation When Timeliness Was Never Disputed by Dept.: CESTAT

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