2023 (1) TMI 1194 - AT - Customs

Time Limit for Refund Claim Filing Determined Incorrectly by Tribunal

M/s. DSM Nutritional Products India Private Limited Versus Commissioner of Customs, Chennai

The Tribunal held that the rejection of the refund claim under Section 27 of the Customs Act was unjustified. It determined that the time limit for filing ... Refund of the Customs Duty paid in respect of the imported goods - permission to re-export the imported goods - rejection of refund only on the ground that the refund claim of the appellant was hit by the provisions of Section 26A (3) ibid - HELD THAT:- The provisions of Section 26A and 27 of the Customs Act operate in different situations: Section 26A (1) specifically covers the refund of import duty in certain cases where the imported goods are found to be defective or not in conformity with the specifications, are identified to the satisfaction of the Assistant Commissioner, there is no claim of drawback and such goods are exported or the importer abandons the goods or they are destroyed or rendered commercially valueless. Thus, all the conditions at (a), (b), (c) and (d) provided under Section 26A (1) are to be satisfied cumulatively - Sub-section (3) to Section 26A prescribes that “no refund under sub-section (1) shall be allowed in respect of perishable goods and goods which have exceeded their shelf life..”. Thus, in my view, the scope of sub-section (3) is limited to the cumulative conditions under (a) to (d) of Section 26A (1) ibid. and the refund claim of any duty that has been paid could be entertained provided the said goods are cleared for home consumption. By ordering destruction, the imported goods in question could never be cleared for home consumption and consequently, the provisions of Section 26A ibid. would not apply. The only provision, therefore, that applies is Section 27 and hence, the rejection of refund by taking recourse to Section 26A (3) by the authorities below is incorrect - Section 27 also prescribes a time-limit of one year, but the same is subject to the saving proviso provided under sub-section (1B). There is no dispute that the appellant paid the duty provisionally and the same is reflected in the orders of lower authorities, including the order of destruction dated 27.05.2015 and thus, in terms of clause (c) to sub-section (1B) of Section 27 ibid., the limitation (of one year), if at all, would apply from the date of adjustment of duty after the final assessment thereof. It is found that even there is no dispute that the Revenue authorities have not passed the final assessment order as yet, as could be gathered from the grounds-of-appeal - the authorities below have erred in rejecting the refund claim, in a haste, even before a final assessment could be made as required under law. Appeal allowed. Issues:- Rejection of refund claim under Section 27(1) of the Customs Act, 1962- Interpretation of Sections 26A and 27 of the Customs Act- Time limit for filing refund claimAnalysis:1. The appellant imported Vitamin Premixes from its parent company for use in trial products. The appellant paid Basic Customs Duty on a provisional assessment basis due to a related party transaction. The Food Safety and Standard Association of India (FSSAI) found that the goods' shelf life had expired, leading to rejection of a refund claim by the Adjudicating Authority.2. The appellant sought permission to re-export the goods, which was denied, and the goods were ordered for destruction by the Joint Commissioner of Customs. The appellant then requested final assessment of the Bills-of-Entry and a refund of the Customs Duty paid on the imported goods.3. The Adjudicating Authority rejected the refund claim as untenable due to filing beyond the one-year time limit under Section 27 of the Customs Act and non-compliance with the Deficiency Memo. The First Appellate Authority upheld the rejection based on Section 26A(3), leading to the current appeal.4. The main issue was whether the rejection of the refund claim was justified. The appellant argued that the claim fell under Section 27, not Section 26A(3). The Tribunal analyzed the provisions of Section 26A and 27, noting that Section 26A(1) covers specific conditions for refund, while Section 26A(3) excludes perishable goods or those exceeding shelf life. As the imported goods were not cleared for home consumption, Section 27 applied.5. The Tribunal highlighted that the time limit for filing a refund claim under Section 27 is subject to certain provisos. Since the final assessment was not completed by the Revenue authorities, the one-year time limit would start from the date of duty adjustment after final assessment. As no final assessment was done, the rejection of the refund claim was premature.6. Consequently, the Tribunal found that the authorities erred in rejecting the refund claim before the final assessment. The impugned order was set aside, and the appeal was allowed with any consequential benefits as per law.