CESTAT allows refund claim for amounts paid under protest, Section 27 limitation doesn't apply to protested payments

The CESTAT Allahabad allowed the appeal regarding refund claim rejection on limitation grounds under Section 27 of the Customs Act, 1962. The tribunal held that the one-year limitation period does not apply when amounts are paid under protest, as Section 27 recognizes payment under protest without requiring vacation of such protest. The appellant had reversed amounts under Rule 6(3) of CCR, 2004 as revenue deposit under protest following departmental directions for goods clearance while challenging the penalty order in appeal. The tribunal ruled that consequential refunds of penalty and redemption fine paid under protest cannot be barred by limitation provisions, directing adjudication of the refund claim accordingly.

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Issues Involved:
1. Applicability of Section 27 of the Customs Act, 1962 for refund claims.
2. Limitation period for filing refund claims under Section 27.
3. Treatment of amounts paid under protest.
4. Entitlement to consequential relief following an appellate order.
5. Interpretation of legal provisions and precedents regarding refunds.

Analysis:

1. Applicability of Section 27 of the Customs Act, 1962 for Refund Claims:
The Commissioner (Appeals) held that Section 27 is the only provision in the Customs Act, 1962 that allows refunds of amounts deposited by any person. Therefore, any claim for refund must be processed under Section 27. The contention that Section 27 is not applicable was deemed without legal basis, as statutory authorities cannot function in a vacuum.

2. Limitation Period for Filing Refund Claims under Section 27:
Section 27 prescribes a one-year limitation period from the date of payment for filing a refund claim. However, this limitation does not apply if the duty or interest was paid under protest. In this case, the amounts were deposited under protest, and the protest continued until the Tribunal's final order on 10.11.2017. The refund claim filed on 26.07.2019 was beyond the one-year period from the Tribunal's order, making it time-barred under Section 27(1B)(b).

3. Treatment of Amounts Paid Under Protest:
The Tribunal emphasized that amounts paid under protest should be refunded if the appellant succeeds in their appeal. Various precedents were cited to support this view, including:
- G S Radiators Ltd. [2005 (179) ELT 222 (T)]
- Hawkins Cookers Ltd. [2017 (346) E.L.T. 298 (Tri. - Mumbai)]
- USV Ltd. [2016 (45) S.T.R. 83 (Tri. - Mumbai)]
- Mangalam Cement Ltd. [2011 (24) S.T.R. (T-Del)]
- Board Circular No. 984/8/2014-CX dated 16.09.2014 clarified that refunds of pre-deposits should not be subjected to the process of refund of duty under Section 27.

4. Entitlement to Consequential Relief Following an Appellate Order:
The Tribunal's final order stated that the appellants are entitled to consequential relief. It is settled law that any amount due to the appellant consequent to an appellate order should be refunded. The Tribunal held that the refund claim should be processed under Section 27 but cannot be barred by the limitation period if the amounts were paid under protest.

5. Interpretation of Legal Provisions and Precedents Regarding Refunds:
The Tribunal referred to several judgments, emphasizing that the limitation period does not apply to amounts paid under protest:
- Abdulla Gani [2013 (298) E.L.T. 221 (Bom)]
- Cooper Pharma [2017 (357) E.L.T. 929 (T-Del)]
- Triveni Engineering & Industries [2018 (363) ELLT 331 (T-All)]
- Ajudhia Sugar Mills Ltd. [2018 (364) ELT 437 (T-All)]
- Mafatlal Industries [1997 (89) E.L.T. 247 (SC)] confirmed that refund claims must be filed and adjudicated under the respective enactments.

Conclusion:
The appeal was allowed, and the Tribunal held that the refund claim should be processed under Section 27 of the Customs Act, 1962. However, the claim cannot be barred by the limitation period as the amounts were paid under protest. The impugned order was set aside, and the refunds were to be allowed in favor of the appellants.

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