2024 (3) TMI 996 - AT - Customs

Refund claim rejected as time-barred after voluntary payment of erroneous refund with interest under Section 28(1)(b)

CESTAT Ahmedabad rejected appellant's refund claim filed in 2021. The court held that appellant's voluntary payment in 2017 of erroneous refund amount ... Refund of SAD - amount paid by the Appellant was a deposit in lieu of an inquiry or not - applicability of time limitation on the refund of amount of deposit or not - HELD THAT:- The letter dated 20.06.2017 by which refund amount along with interest dated 12/20.06.2017 had been paid by the appellant of amount of erroneous refund along with interest on same having been communicated to them was voluntarily act and which falls within parameter of requirement of Section 28 1(b) and because of which the proper officer was not required to issue any further show cause notice, unless the erroneous refund was found to be short paid. The appropriation of amount of refund and interest once paid voluntarily by appellant is selfappropriation. The amount thus paid was clearly on account of erroneous refund which vide its payment was accepted by the party obviating any necessity of further show cause notice. If for any reason appellant wanted refund of such erroneous refund amount paid by them, then the same had to be within the prescribed limitation which as per the concurrent findings of the lower authorities was not done and therefore, the claim filed in the year 2021 was clearly barred by limitation. Impugned order is therefore maintained and appeal is rejected. Issues Involved:1. Refund of Special Additional Duty (SAD)2. Limitation period for refund claim3. Characterization of the amount paid as 'deposit' or 'duty'4. Appropriation of the amount paid5. Applicability of Article 265 of the Constitution of IndiaIssue-wise Summary:1. Refund of Special Additional Duty (SAD):The Appellant, engaged in importing Mitsubishi Air Conditioners, filed a claim for a refund of Rs. 3,79,272.40 under Notification No. 102/2007-Cus. The Assistant Commissioner sanctioned the refund, noting that the Appellant had paid all duties and submitted necessary documents. However, an inter-departmental audit later flagged non-fulfillment of a condition in Para 2(b) of the Notification, leading the Appellant to deposit Rs. 4,06,393/- (refund amount plus interest).2. Limitation Period for Refund Claim:The Appellant's reminder letter dated 11.10.2021, treated as a refund application, was filed after the permissible period of one year from the date of payment. The Deputy Commissioner rejected the refund claim as time-barred. The Commissioner (Appeals) upheld this decision, noting that the refund application submitted on 11.10.2021 was hit by the limitation prescribed in Para 2(c) of Notification No. 102/2007-Cus.3. Characterization of the Amount Paid as 'Deposit' or 'Duty':The Appellant argued that the amount paid was a deposit, not a duty, and thus not subject to the limitation period u/s 27 of the Customs Act, 1962. The Appellant contended that the payment was made under protest and without any assessment or adjudication. However, the Tribunal found this argument legally unsustainable, noting that the amount was paid voluntarily in response to the audit observation.4. Appropriation of the Amount Paid:The Tribunal referred to Section 28 of the Customs Act, 1962, which states that no show cause notice is required if the duty is paid voluntarily. The Tribunal found that the amount paid by the Appellant was a self-appropriation for the erroneous refund and did not require further show cause notice. The Tribunal cited judgments from the CESTAT, Mumbai, and Chennai, supporting this view.5. Applicability of Article 265 of the Constitution of India:The Appellant argued that the retention of Rs. 4,06,393/- by the Department violated Article 265 of the Constitution, which mandates that no tax shall be levied or collected except by authority of law. The Tribunal rejected this argument, stating that the amount was paid voluntarily and the refund claim was time-barred.Conclusion:The Tribunal upheld the decision of the lower authorities, rejecting the Appellant's refund claim as time-barred and maintaining that the amount paid was a voluntary act, not requiring further show cause notice. The appeal was dismissed.