The Bombay High Court has directed the Customs Department to refund Rs. 2,94,206 with 9% interest to a Mumbai-based exporter after finding that the amount was wrongly recovered due to an error in quoting the wrong Permanent Account Number (PAN).
The Bench of Justice M.S. Sonak and Justice Advait M. Sethna, while hearing a writ petition filed by a sole proprietor of a design export firm, held that the recovery made by the Customs authorities by referring to the PAN of another entity—Variety Garments, Bengaluru—was “illegal and improper.”
The bench has given the department four weeks to refund the amount and further directed that any delay beyond this period would require the interest to be recovered personally from the responsible officers after an internal inquiry.
The petitioner, a proprietor of Venus Designs, approached the Court seeking a refund of Ra. 2.94 lakh that had been recovered by Customs in November 2023 based on an incorrect PAN reference. The petitioner also sought correction of Customs records to prevent recurrence of such errors.
According to the petition, the Customs Department had demanded ₹2,94,206 by erroneously referring to the PAN of Variety Garments instead of the petitioner’s PAN. The petitioner paid the amount via demand draft dated October 26, 2023, which was deposited on November 8, 2023.
Despite representations highlighting the mistake, no refund was issued, compelling the petitioner to approach the High Court.
The Department argued that the petitioner was already liable to pay Rs. 2.88 lakh towards wrongly claimed customs drawback under an earlier demand notice dated August 31, 2018, and that interest accrued at 18% per annum had increased the liability to over ₹11.5 lakh. The payments made by the petitioner—₹2.94 lakh in November 2023 and ₹3.54 lakh in April 2024—were part of this liability, leaving a balance due.
Rejecting the Customs’ argument, the Bench made a clear distinction between the two amounts in question — ₹2,94,206 (wrongly recovered) and ₹2,88,879 (allegedly due under a separate demand).
The judges observed that these two issues “must be separately considered,” adding that there was no admission by the petitioner of any ₹11.5 lakh liability.
“The recovery of ₹2,94,206 by quoting the PAN number of the third respondent was illegal and improper. Upon realising the mistake, this amount should have been forthwith refunded by the Respondents,” the Court noted.
The Bench further ordered that if the refund is delayed beyond four weeks, additional interest for the extended period must be recovered from the responsible officers after a departmental inquiry by the Commissioner of Customs.
“For the delay on the part of the officers in complying with the directions of this Court, a taxpayer’s amount should not be utilised,” the judges remarked, adding that the Commissioner may also make appropriate entries in the confidential records of those officers, subject to due process.
The High Court directed the customs to refund ₹2,94,206 with 9% annual interest from November 8, 2023, until the date of refund, to be credited into the petitioner’s Kotak Mahindra Bank account. If the refund is not made within the stipulated time, further interest shall be recovered from erring officials. The Customs Department must also rectify its records to prevent recurrence of such PAN-related errors. The Court clarified that Customs is free to pursue any legitimate demands against the petitioner through due process of law, but only after issuing proper notices.
Case Details
Case Title: Vina Ahuja Versus The Commissioner of Customs (Export)
Case No.: Writ Petition No. 299 Of 2025
Date: 22 September 2025
Counsel For Petitioner: Kumar Kothari
Counsel For Respondent: Jitendra B. Mishra
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