The Calcutta High Court has held that the customs refund is not time-barred when duty paid under protest.
The division bench of Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das) dismissed an appeal filed by the Commissioner of Customs (Preventive), Kolkata, upholding the order for a refund of Rs. 7,98,08,012 to M/s Raymond Apparel Limited. The refund pertains to customs duty paid under protest for 174 bills of entry, with the court also directing that the amount be returned with interest within three days of receiving the order.
The bench noted that when duty is paid under protest, the usual one-year limitation period does not apply, citing established judicial precedents, including Mafatlal Industries Ltd. v. Union of India and Kisan Cooperative Sugar Factory Ltd. v. Commissioner of Central Excise.
The dispute stems from customs duty payments made by Raymond Apparel Limited on 174 bills of entry for imported consignments. The company had consistently marked these payments as “under protest,” indicating disagreement with the duty levied but clearing the goods to avoid supply chain disruptions.
The matter took shape after the Supreme Court’s ruling in SRF Ltd. v. Commissioner of Customs, Chennai (2015), which clarified certain valuation issues under customs law. Following this decision, Raymond Apparel filed a refund application on February 6, 2018, seeking reimbursement of the duties it claimed were wrongly collected.
The original adjudicating authority, after reviewing the evidence, sanctioned the refund under Section 27 of the Customs Act, 1962, in May 2021. The Commissioner (Appeals), Kolkata, upheld this decision in June 2022, rejecting the department’s argument that the claim was barred by limitation and noting that the payment under protest kept the claim alive.
The Customs Department, however, challenged the appellate order before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), relying heavily on the Supreme Court’s decision in ITC Ltd. v. CCE, Kolkata-IV. The department argued that unless the assessment order was first modified through proper appeal, no refund could be granted, and that the protest ended after the SRF Ltd. judgment in 2015.
In May 2024, the CESTAT dismissed the department’s appeal, affirming that the protest remained valid until the final resolution of the dispute and that the limitation period did not apply. This prompted the department to escalate the matter to the Calcutta High Court.
The department had argued that, as per the Supreme Court’s ruling in ITC Ltd. v. CCE, Kolkata-IV, refund claims are not maintainable unless the assessment order is first modified. They also contended that the protest lodged by Raymond Apparel ceased to be valid after the Supreme Court’s 2015 decision in SRF Ltd. v. Commissioner of Customs, Chennai.
However, the High Court upheld the Tribunal’s view that the protest remained effective until the dispute was finally resolved by higher appellate forums, and that no order vacating the protest had been passed. The court emphasized that marking payment as “under protest” signals to the department that the duty is not being paid voluntarily, requiring the authorities to initiate proceedings to vacate the protest.
On the question of interest, the bench noted that Raymond Apparel had only sought interest after the expiry of 90 days from the date the refund application was granted, making the department’s objection irrelevant.
Case Details
Case Title: Commissioner Of Customs (Preventive), Kolkata Vs M/S. Raymond Apparel Limited
Case No.: CUSTA/2/2025 IA NO: GA/1/2025
Date: 02/08/2025
Counsel For Petitioner: Uday Sankar Bhattacharya, Adv.
Counsel For Respondent: Rahul Tangri, Adv.
