Provisional assessment security deposit must be returned on finalisation, without Section 27 limitation applying to the refund.

Extra Duty Deposit collected during provisional assessment of imported goods from related parties is a security deposit meant to safeguard revenue until finalisation. Once the Special Valuation Branch accepted the declared value and assessment was finalised, the department had no basis to retain the deposit, and its return followed as a consequence of finalisation rather than as an independent refund claim under Section 27 of the Customs Act, 1962. The limitation period for refund claims under Section 27 therefore did not apply, and continued retention after finalisation was inconsistent with Article 265 of the Constitution. Non-production of the original TR6 challan was treated as a curable procedural objection and did not defeat the refund.

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Issues: Whether Extra Duty Deposit collected at the time of provisional assessment of imported goods from related parties had to be returned on finalisation of assessment without requiring a refund application under Section 27 of the Customs Act, 1962, and whether the claim could be rejected as time-barred or for want of original TR6 challan.

Analysis: Extra Duty Deposit is a security deposit taken during provisional assessment and is meant only as a safeguard pending finalisation. Once the Special Valuation Branch accepted the declared value and the provisional assessments were finalised, the amount retained by the department ceased to have any basis for continued retention. Circular No. 5/2016-Customs dated 09.02.2016 required finalisation of such provisional assessments on receipt of the report, without any speaking order, and the importer was not required to seek finalisation by a separate application. The refund of such deposit was therefore treated as a consequence of finalisation and not as an independent refund claim governed by the limitation prescribed for claims under Section 27. The retention of a security deposit after finalisation was also inconsistent with Article 265 of the Constitution of India. The objection based on non-production of the original TR6 challan was treated as a curable procedural matter in the peculiar facts.

Conclusion: The deposit had to be returned on finalisation of assessment, the claim was not barred by limitation under Section 27 of the Customs Act, 1962, and the objection relating to the original TR6 challan did not survive to defeat the refund.

Ratio Decidendi: A security deposit collected during provisional assessment must be returned on finalisation of assessment, and such return is not governed by the limitation framework applicable to independent refund claims under Section 27 of the Customs Act, 1962.

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