2025 (8) TMI 102

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....e issue involved herein is confined to the applicability of limitation as prescribed under Section 27 of the Customs Act, 1962 for the refund of bank guarantee furnished by the appellant, which had been encashed by department during the pendency of appellant's appeal before this Tribunal which was subsequently allowed in favour of appellant. 3. The factual matrix, shorn of unnecessary details, in brief are that the appellant imported certain material vide three Bills of Entry dated 21.08.2003. Owing to certain dispute raised by the department, the said goods were provisionally released on 12.01.2004 against execution of Bond and furnishing of Bank Guarantee of Rs. 10 lakhs. A show cause notice was issued proposing demand of customs duty am....

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....nd learned Authorised Representative on behalf of revenue and perused the case records including the written submissions placed on record. As stated earlier, the pivotal question that arises is whether, a bank guarantee furnished for provisional release of goods and encashed during the pendency of appeal, can be construed as 'payment of duty' so as to attract the limitation period prescribed u/s 27 ibid. The title of the said provision is 'Claim for refund of duty'. The relevant portion of the said section is extracted hereunder:- "27. Claim for refund of duty (1) Any person claiming refund of any duty or interest.- (a) paid by him; or (b) borne by him, may make an application in such form and manner as may be prescribed for such ....

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....endency of the appeal, the Hon'ble Supreme Court in Oswal Agro Mills Ltd. v. Asstt. Collector of Central Excise, Division Ludhiana; 1995 Supp. (3) SCC 65 (hereinafter referred to as 'Oswal Agro Mills Ltd. 1') found the behaviour of the department highly improper and held that bank guarantees were furnished to secure the interest of the parties till determination of matters pending before the Court and it could not be encashed till the decision of the Court. It further held that the Revenue had no power to get the bank guarantee encashed by using its executive fiat. Therefore while allowing the appeal, the Hon'ble Supreme Court directed the revenue to refund the money, collected by encashing the bank guarantee, forthwith. On a review petitio....

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....27, Customs Act, 1962?' allowed the appeal and reiterated that encashment of bank guarantee offered as security cannot be treated as 'payment of customs duty' and therefore the doctrine of unjust enrichment or Section 27 of the Customs Act would not be attracted in such cases. The relevant paragraphs whereof are extracted as under:- "xxx xxxx 30. ........Under the scheme of the Customs Act, duty is assessed provisionally or finally whereafter an assessment order or order-in-original is passed. Post assessment order or order-in-original, the concerned importer is required to pay the assessed duty. If the importer does not pay the duty, revenue can enforce recovery under Section 142 of the Customs Act as recovery of sums due to the Govern....