TaxTMI 
TaxTMI 
TaxTMI 
The Hon'ble CESTAT, Principal Bench, New Delhi, in Nikon India Private Ltd. Versus Commissioner of Customs (Import), New Delhi - 2026 (4) TMI 448 - CESTAT NEW DELHI held that a refund application filed while the underlying assessment dispute is still pending before the appellate authorities cannot be sustained. The cause of action for a refund only arises once the dispute is finally settled in favour of the assessee.
Facts:
- M/s. Nikon India Private Ltd. ('the Appellant') imported Digital Still Image Video Cameras ('DSCs') and claimed a Basic Customs Duty ('BCD') exemption under Notification No. 25/2005-Cus.
- Following a Department of Revenue Intelligence's ('DRI') investigation, the department denied the exemption from February 2014 onwards. The appellant paid the duty 'under protest' and repeatedly requested a speaking order under Section 17(5) of the Customs Act, 1962 ('the Act 1962').
- Due to delays in receiving a speaking order, the appellant filed a refund application for Rs. 7,32,77,496/- on July 21, 2015, 'in abundant caution'. The Assistant Commissioner rejected this refund claim in February 2016, stating that the assessment had not been modified or set aside by any appellate authority.
- Years later, a Larger Bench of the CESTAT (June 2024) and a Division Bench (September 2024) finally ruled in the Appellant's favour, holding that the imported DSC were eligible for the exemption.
- The appellant argued that this favourable ruling should retrospectively validate their 2015 refund application as a consequential relief.
Issues:
- Whether a refund application filed before the final resolution of an assessment dispute is maintainable?
- From which date does the 'cause of action' for filing a refund arise when duty is paid under protest during a pending dispute?
Held:
The Hon'ble CESTAT, Principal Bench, New Delhi, held under [Nikon India Private Ltd. Versus Commissioner of Customs (Import), New Delhi - 2026 (4) TMI 448 - CESTAT NEW DELHI ] as follows:
- That the Tribunal relied on the Supreme Court's judgment in DENA SNUFF (P) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH - 2003 (9) TMI 84 - Supreme Court, in which it was held that when duty is paid under protest pending a classification or exemption dispute, the right to claim a refund only arises after the final decision in the assessee's own case.
- observed that at the time the appellant filed the refund application (July 21, 2015), the issue of their eligibility for the exemption was still being litigated and was only settled by the Tribunal in 2024.
- Consequently, the 2015 refund application was deemed premature, and hence no cause of action existed at the time of its filing.
- The Tribunal concluded that the Commissioner (Appeals) ('The Respondent') was correct in rejecting the refund application, and the present appeal was dismissed.
Relevant Sections & Precedents:
- Section 27 of the Customs Act, 1962:[(1) Any person claiming refund of any duty or interest, - (a) paid by him; or (b) borne by him, may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest:
- Section 17(5) of the Customs Act, 1962:Where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer or exporter and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re-assessment in writing, the proper officer shall pass a speaking order on the re-assessment, within fifteen days re-assessment of the bill of entry or the shipping bill, as the case may be.