2024 (7) TMI 1078 - AT - Customs

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 ... Refund claim - rejection of refund on the ground that they have been filed beyond the prescribed period of limitation as per Section 27 of the Customs Act, 1962 - HELD THAT:- The period of limitation of one year does not apply when the amount claimed as refund have been paid under protest. Section only recognizes the fact of payment of amounts under protest. It does not recognize the vacation or such a protest once it is established that the amount claimed as refund were paid under protest. There are no reason why such a condition can be imported within the statute which has been not provided. In case of TRIVENI ENGG. & INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., ALLAHABAD [2012 (6) TMI 757 - CESTAT NEW DELHI] following has been held that 'Bagasse is not a dutiable item and not a manufacture item, as held by the Hon’ble Supreme Court, there was no question of any reversal of duty under the provision of Rule 6 (3) of CCR, 2004. Under such facts and circumstances, I hold that the amount reversed by the appellant under Rule 6 (3) of CCR was in the nature of revenue deposit. Further, it is an admitted fact that such amount was reversibly deposited under protest.' There are no merits in the submissions made to the fact that the provisions of Section 27 could not apply to the case of refund of penalty and fines. The period of limitation shall not apply in the present case and refunds claim have to be adjudicated accordingly, treating that these amounts of redemption fine and penalties were paid under protest as per the direction of the department, for effecting the clearance of the goods though the order imposing the fine and penalty was challenged in appeal. Thus though it is held that the refund claim has to be processed under the provisions of Section 27 of the Customs Act, 1962, as this is a case of consequential refund of penalty and redemption fine, the same cannot be held to be barred by the limitation as provided in the said section. There are no merits in the impugned order - appeal allowed. 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.