1988 (5) TMI 250 - AT - Customs

Dismissal of Refund Claim for Duty on Replaced Parts Upheld

The appeal against the order-in-appeal rejecting the refund claim of duty on replaced parts was dismissed. The appellant's claim for a refund was based on ... Dutiability Issues:- Appeal against order-in-appeal rejecting refund claim of duty on replaced parts- Claim for refund barred under Section 27 of the Customs Act- Duty paid on replaced parts- Time limitation for refund claimAnalysis:The appeal in question arises from an order-in-appeal issued by the Collector of Customs (Appeals) Bombay, rejecting the appellant's claim for a refund of duty on replaced parts. The Collector (Appeals) upheld the decision of the Assistant Collector, citing limitation as the grounds for rejection. The appellant imported automatic card sets, cleared them on payment of duty, and later found certain parts defective. The defective parts were replaced by the supplier free of charge, but duty was paid on the replaced parts upon clearance. The main contention of the appellant was that the refund application was made within six months of payment for the replacement parts, thus not barred under Section 27 of the Customs Act.During the appeal hearing, the appellant's representative reiterated the grounds mentioned in the appeal memo, emphasizing that no duty should have been levied on the replaced parts as they were supplied free of cost. On the other hand, the Collector's representative opposed the appeal, arguing that the claim was time-barred. The Member (J) carefully considered the submissions and reviewed the case records.It was established that the appellant did not notify customs about the defective parts before physical clearance, and only later sought a refund for duty paid on the replaced parts. The Member (J) concluded that the duty on the replacement parts was rightly levied and paid, as the duty payment is not contingent on the parts being supplied free of charge. The appellant's failure to notify customs about the defects earlier rendered any claim for refund on the defective parts time-barred. However, since the refund claim was specifically for the duty paid on replacement parts, which was within the time limit, the claim was not barred under Section 27. Despite this, the Member (J) rejected the appeal, stating that the refund claim for duty on replacement parts lacked a legal basis, as the duty was rightfully paid on those parts. The appellant was deemed liable for duty on the replacement parts and had no grounds for a refund, thereby dismissing the appeal on different grounds than those cited by the lower authorities.