2025 (8) TMI 421 - HC - Customs

Tribunal dismissal of revenue's appeal on refund claim timing under Customs Act Section 27(1B)(b) upheld

The HC upheld the Tribunal's dismissal of the revenue's appeal regarding the time limitation for filing a refund claim under section 27(1B)(b) of the ... Time limitation for filing refund claim - refund application was required to be made within one year from the judgment and order of the Hon’ble Supreme Court of India in the case of M/s. SRF Vs. Commissioner of Customs Chennai [2015 (4) TMI 561 - SUPREME COURT] as per provision of sub-section 1B(b) of section 27 of the Customs Act, 1962 or not - applicability of provision of section 27 of the Customs Act, 1962 and Circular No.24/2004-Cus. Dated 18/03/2024. HELD THAT:- The co-ordinate Bench of the Tribunal in the case of Commissioner of Commissioner of Customs, Tuticorin vs. Sakthi Sugars Ltd., [2020 (4) TMI 840 - CESTAT CHENNAI] held that the marking of protest itself gives information to the department that there is no requirement for reassessment. The assessment under Section 17 of the Customs Act, 1962 cannot be said to be finalised when the respondent therein has marked the protest while paying duty. It was further held that mark of protest is an information to the department that the assessee is not making payment of cess/duty voluntarily and then department has to initiate proceedings to vacate the protest and pass speaking order of reassessment. Similar view was taken by the co-ordinate Bench of the Tribunal in HDFC Bank Ltd. Vs Principal Commissioner of GST & CE, [2020 (7) TMI 362 - CESTAT CHENNAI]. In the instant case, the respondent has not claimed interest from the initial date but they have claimed interest only after expiry of the period of 90 days from the date on which the application for refund was granted. Therefore, the said objection raised by the revenue would not arise in the instant case. The learned Tribunal was fully justified in dismissing the revenue’s appeal - the appeal is dismissed and the substantial questions of law are answered against the revenue. ISSUES: Whether the refund application was required to be made within one year from the judgment and order of the Hon'ble Supreme Court as per sub-section 1B(b) of section 27 of the Customs Act, 1962.Whether the refund application dated 06.02.2018 filed by the respondent is time barred and liable to be rejected.Whether the impugned order passed by the Tribunal is contrary to section 27 of the Customs Act, 1962 and Circular No.24/2004-Cus., and the Supreme Court judgment in ITC Ltd. Vs. CCE, Kolkata-IV.Whether duty paid under protest amounts to a challenge to the assessment and affects the applicability of limitation under section 27 for refund claims.Whether interest is payable on the refund amount where the claim for interest is made after expiry of 90 days from the date of grant of refund application. RULINGS / HOLDINGS: The refund application is not required to be made within one year from the Supreme Court judgment under sub-section 1B(b) of section 27 where duty has been paid under protest; limitation does not apply in such cases.The refund application dated 06.02.2018 is not time barred and is liable to be considered on merits despite the delay, as the duty was paid under protest and the limitation under section 27 does not apply.The impugned order passed by the Tribunal is not contrary to section 27 of the Customs Act, 1962, Circular No.24/2004-Cus., or the Supreme Court judgment in ITC Ltd. Vs. CCE, Kolkata-IV, as the refund proceedings cannot substitute appeal proceedings but duty paid under protest is treated as a challenge to assessment.Duty paid under protest tantamounts to a challenge to the assessment, and the protest remains effective until disposed of by an appealable order; thus, refund claims are not barred by limitation under section 27 until the protest is vacated.Interest on the refund amount is payable where claimed after expiry of 90 days from the date of grant of refund; objections to interest payment are not sustainable if interest is claimed only after such period. RATIONALE: The Court applied section 27 of the Customs Act, 1962, particularly sub-section 1B(b), and relied on precedent decisions including ITC Ltd. Vs. CCE, Mafatlal Industries Ltd. Vs. Union of India, and SRF Ltd. Vs. Commissioner of Customs, Chennai, to interpret the scope of limitation and refund claims where duty is paid under protest.The Court referenced Tribunal decisions establishing that payment of duty under protest constitutes a challenge to assessment, preventing limitation from running under section 27 until the protest is disposed of by an appealable order as mandated by Rule 233B.The Court distinguished the effect of protest on limitation, holding that refund proceedings cannot replace appeal or reassessment but that protest preserves the right to claim refund beyond normal limitation periods.The Court noted the principle that unjust enrichment does not bar refund of duty paid under protest, and that interest may be awarded excluding periods of delay in filing refund applications, consistent with prior rulings.No dissent or doctrinal shift was indicated; the Court affirmed existing legal interpretations and applied them to the facts before it.