The Ahmedabad Bench of Customs, Excise and Service Tax Appellate (CESTAT) has held that pre-deposit is to be refunded without raising the issue of limitation.
The bench of Ajaya Krishna Vishvesha (Judicial Member) has observed that where an assessee succeeds in overturning an adjudication order, any amount paid either during investigation or as pre-deposit is to be refunded without raising the issue of limitation. The refund claim in such cases is not an ordinary claim under the Customs Act but it is consequential relief resulting from the appellate order and therefore, cannot be rejected on the ground of limitation as being time-barred.
The appellant/assessee was engaged in the trading of various stock lot and mixed lot materials. In the course of business, the appellant imported certain goods. However, the department raised a dispute pertaining to the valuation of the goods imported by the appellant.
A show cause notice was issued to the importer of stock lot paper rolls and aluminium foils backed with papers. Subsequently, the appellant received another show cause notice with respect to the paper rolls imported by the appellant. During the course of investigation, the appellant, out of compulsion, deposited an amount of Rs.5,00,000/- through TR-6 challan.
The payment of Rs.5,00,000/- by the appellant has been made under protest. The appellant made this payment through a Demand Draft, accompanied by the letter dated 29.10.2010, which explicitly indicated that the payment was made under protest, as evidenced by the words, “…..though we are not agreeable we had paid…..”. This amount deposited by the appellant would never partake the character of duty to warrant application of rigors of Section 27 of the Customs Act. The rejection of the refund claim on the ground of limitation is thus, ex-facie illegal and without authority of law.
The assessee contended that the refund claim pertains to the amount deposited during the course of investigation, which was subsequently confirmed by the Adjudicating Authority in the impugned order. However, as the appellant successfully challenged the said adjudicating order, the amount becomes refundable as a consequence of the appellate decision in favour of the appellant. It is well settled legal position that refund claims arising as a consequence of appellate orders cannot be rejected on the ground of limitation.
The department contended that the Assistant Commissioner, Customs has rightly rejected the claim of Rs.5,00,000 of the appellant on the ground that it was time barred.
The tribunal held that the amount deposited by the appellant cannot be taken as duty but it was a deposit and therefore, the refund application could not have been rejected on the ground of limitation.
Case Details
Case Title: Aryan Chemicals Versus Commissioner of Customs-Ahmedabad
Case No.: Excise Appeal No. 10937 of 2015 – SMB
Date: 01.05.2025
Counsel For Appellant: Kartik Kachhawah
Counsel For Respondent: Sunita Menon
