2026-VIL-1284-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - Refund of Duty Paid on Imported Goods not cleared for Home Consumption - Appellant imported goods and provisionally paid customs duty but the goods were never cleared for home consumption and were warehoused and thereafter re-exported - Appellant filed a refund claim initially under Section 27 of the Customs Act 1962 and subsequently changed the basis of the claim to Section 26A - Dept rejected the refund claim invoking the second proviso to Section 26A on the ground that an offence appeared to have been committed - Whether Section 26A applies to refund claims in cases where goods have been paid duty but never cleared for home consumption and remained under the control of Customs authorities and were re-exported and whether the second proviso to Section 26A can be invoked to deny the refund – HELD – The Section 26A applies only where duty has been paid on clearance of goods for home consumption and the opening words of sub-section 1 require that goods be cleared for home consumption as a sine qua non for the applicability of the section. In the present case the goods were never cleared for home consumption and remained warehoused under the control of Customs authorities and were re-exported and therefore Section 26A is wholly inapplicable. Since Section 26A itself does not apply a proviso which merely carves out an exception from the substantive right cannot equally apply as a proviso cannot have an existence independent of or wider than the main provision to which it is attached - The impugned order by invoking the second proviso to a section that does not govern the claim at all has proceeded on a fundamental error of law. Since the appellant had raised the plea of considering the refund claim under Section 27 before the Commissioner in Appeal but this was not recorded or addressed in the impugned order and further the appellant had changed the stand before the Adjudicating authority creating confusion - The matter is remanded to the Commissioner (Appeals) with directions to verify whether the plea under Section 27 was actually raised and if substantiated to consider the refund claim on merits under Section 27 or otherwise pass the order under Section 26A only - The appeal stands disposed of by way of remand
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