Illegal cess collection on exports treated as a deposit, so refund was not confined to Customs Act restrictions.

Cess collected on export of hookha tobacco paste without legal authority was treated as an ab initio illegal collection, so it assumed the character of a deposit with Customs rather than a lawful levy. On that basis, the refund claim was not governed by the restrictions in Sections 26 and 27 of the Customs Act, 1962, which apply to specified refund situations for lawful collections. The claim could not be rejected for non-compliance with those provisions, and refund was due.

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Issues: Whether cess collected on export of hookha tobacco paste, though not leviable, could be treated as refundable only within the framework of Sections 26 and 27 of the Customs Act, 1962.

Analysis: The collection was found to be ab initio illegal because the cess was not leviable on the exported goods. Once the amount was collected without authority of law, it assumed the character of a deposit with the Customs and not a lawful levy governed by the refund restrictions applicable to re-imported or returned goods. The refund claim was therefore not controlled by the conditions of Sections 26 and 27 of the Customs Act, 1962.

Conclusion: The refund claim could not be rejected on the footing of non-compliance with Sections 26 and 27 of the Customs Act, 1962, and the assessee was entitled to refund.

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