Cash refund of excess customs duty was allowed where a technical system error forced payment in cash instead of licence recredit.

Excess customs duty paid in cash after a licence debit failed to reflect in the system due to a technical error was held refundable in cash, because the claim concerned duty actually paid and not recredit in the licence. A circular relied on to deny cash refund was treated as ultra vires in prior authority, and cases involving full duty payment through scrip were distinguished on facts. The Tribunal also applied the principle that the Department cannot benefit from its own system error. Cash refund was therefore held admissible and the denial was set aside.

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Issues: Whether excess customs duty paid in cash against a licence could be refunded in cash rather than by recredit in the licence.

Analysis: The excess duty had been paid in cash after the debit through the licence did not reflect in the system due to a technical error. The refund application was for excess duty actually paid, not for recredit in the licence. The circular relied upon to deny cash refund was treated as ultra vires in prior authority, and the decisions cited by the Department were distinguished because they involved situations where the entire duty had been paid through scrip. The Tribunal also applied the principle that the Department cannot take advantage of its own wrong when the error in system reflection led to the cash payment.

Conclusion: The refund was held to be admissible in cash, and denial of cash refund was set aside in favour of the assessee.

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