2026-VIL-1048-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs - Refund of Extra Duty Deposit (EDD) - Whether delay in sanction of refund attracts interest under Section 27A of the Customs Act, 1962 – Whether there is a delay in sanction of refund of Extra Duty Deposit and whether interest under Section 27A of the Customs Act, 1962 is payable on such delayed refund, and if payable, for what period – HELD – The Extra Duty Deposit is distinct from customs duty as defined under Section 2(15) of the Customs Act, 1962. Extra Duty Deposit is a deposit of prescribed percentage of declared assessable value obtained pending submission of documents in respect of related party transactions under Special Valuation Branch investigation, whereas duty refers to customs duties leviable under Section 14 of the Customs Act, 1962 read with the Customs Tariff Act, 1975. Extra Duty Deposit is secured by revenue for the specific purpose of obtaining documentation in time to enable timely finalization of provisional assessments, while duty and security of duty are determined by the proper officer to secure payment of deficiency between finally assessed and provisionally assessed duty. Upon furnishing of required information, the requirement of payment of Extra Duty Deposit is dispensed with while continuing imports under provisional assessment. Since Extra Duty Deposit is collected for purposes of Sections 17 and 18 of the Customs Act, 1962 and is refundable when not required to make good any deficiency of finally assessed duty, the legal provisions of Section 27A apply mutatis mutandis to Extra Duty Deposit as they apply to duty - The effective date for initiating the clock for refund claim is the date on which the orders of assessment upon finalization of provisional assessment were passed, determining the amount refundable. Therefore, the period for which interest on delayed refund commences from the expiry of three months from the date of passing of Orders-in-Original, till the date of actual payment of refund amounts - Once the issue of eligibility to sanction refund was determined by finalizing the provisional assessments after accepting the finality of the Special Valuation Branch, the importer was eligible to be sanctioned the refund amount claimed. The department failed to process the refund claims for more than 16 years from the date the refund application was received, which constitutes delay beyond the prescribed three-month period under Section 27A - Interest under Section 27A of the Customs Act, 1962 at the rate fixed by the Central Government is payable on the refunded Extra Duty Deposit amounts for the period commencing from the expiry of three months from the date of passing of Orders-in-Original till the date of actual payment of refund - The appeals are allowed
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