LIMITATION FOR REFUND OF CUSTOMS DUTY

Section 27 of the Customs Act, 1962 (‘Act’ for short) provides the procedure for claim of refund of customs duty. Section 27(1) of the Act provides that if any person paid customs duty or interest may claim refund within one year from the date of the payment of duty or interest. This limitation of one year is not applicable if the duty or interest is paid under protest. The said one year limitation is applicable in the following cases-

• From the date of order of Appellate Authority, Appellate Tribunal, High Court or Supreme Court;
• From the date of adjustment of provisional assessment in the final assessment order;
• From the date of issue of exemption order;
• From the date of payment duty or interest consequent to Section 18A of the Act.

Even when the refund application is within limitation, the claimant ordinarily has to establish that the incidence of customs duty has not been passed on to another person. Otherwise, the refundable amount is generally credited to the Consumer Welfare Fund, subject to the exceptions in Section 27(2).

 In M/s Krupadeep Traders Versus The Commissioner of Customs, Pune-I - 2026 (4) TMI 316 - CESTAT MUMBAI, the appellant exported ‘Western Ghats Bauxite-India Origin’ to Japan. The appellant filed the shipping bills. The said bills were assessed provisionally for non-availability of chemical test report and the final invoices. The said provisional bills were finalised vide order dated 27.02.2014 and 05.03.2014. The duty determined in these final assessments are Rs.14.05 lakhs and Rs.10.90 lakhs respectively. The said amount was paid by the appellant.

Later the appellant contended that the duty paid by the appellant during the course of provisional assessment is not required to be paid by the appellant. The appellant challenged the final assessment orders by filing appeal before the Commissioner of Customs (Appeals). The Commissioner of Customs (Appeals) allowed the appeal filed by the appellant vide their order dated 15.02.2016. Consequent to the order of Commissioner, Appeals, the appellant filed a refund application on 26.02.2020.  The said refund application was rejected by the original authority on the ground of limitation.  It was held that the refund application is to be filed within one year from the date of the order of Commissioner of Customs (Appeals), under Section 27 of the Act. Since the refund application was filed beyond the limitation period the same was rejected by the Authority.

 The appellant, being aggrieved against the order of the original authority, filed an appeal before the Commissioner of Customs (Appeals). The Commissioner of Customs (Appeal) dismissed the appeal upholding the order of the original authority on 17.02.2021. Being also aggrieved against the order of Commissioner of Customs (Appeals), the appellant filed the present appeal before the Appellate Tribunal.  

The appellant contended before the Appellate Tribunal that the case of the appellant falls under Section 26 of the Act. The Authority dealt the refund application filed by the appellant under Section 27 of the Act.  Therefore, he is entitled to get the refund of the excess paid duty.  The appellant further contended that the Department filed an appeal before the Appellate Tribunal against the order of Commissioner of Customs (Appeals) and is pending with the Appellate Tribunal. Therefore, the appellant contended that the limitation period of one year shall not be reckoned from the date of the order of the Commissioner of Customs (Appeals).

The Appellate Tribunal heard the submissions of the Appellant. The Appellate tribunal observed that the case of the appellant does not fall under section 26 of the Act, since it is not a case of return of exported goods or re-importation of the exported goods. Even section 26 is appliable to the appellant’s case, the Appellate Tribunal observed that Section 26(c) provides a time frame for filing the refund application. The same was not complied with by the Appellant. Section 27(1B)(b) of the Act provides that where the duty became refundable consequent to any order passed by the appellate authority. The refund application is to be filed within one year from the date of the order of Appellate Authority. The Commissioner of Customs (Appeals) allowed the appeal filed by the appellant on 15.02.2016 whereas the appellant filed the refund application on 26.02.2020 which is beyond the period of limitation i.e., one year from the date of passing the appeal order on 15.02.2016.

In view of the above the Appellate Tribunal dismissed the appeal filed by the Appellant and upheld the rejection order passed by the original authority.