2026-VIL-812-CESTAT-ALH-CU
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CUSTOMS CESTAT Cases

Customs - Refund of Extra Duty Deposit (EDD) paid against Customs Bills of Entry, Limitation period for claiming refund of EDD - Whether the appellant has passed on the incidence of EDD to other person, thereby disentitled to refund under the principle of unjust enrichment – HELD - The appellant had taken a loan from their principals to deposit the EDD and later repaid the loan. The EDD deposited was shown as recoverable from Customs Authority in the Balance Sheets. The loan transaction between the appellant and their principal is separate from the clearance of imported goods and the burden of EDD has been borne by the appellant. The findings of the lower authorities that the appellant has passed on the incidence of EDD to other person is erroneous and not sustainable. The appellant is entitled to the refund of EDD and also interest on delayed refund – Further, the EDD paid is not in the nature of customs duty but a deposit to secure any duty that may be found payable. When the allegation of under-declaration is found to be not valid, the substratum of EDD deposit no longer exists. Therefore, the limitation period for claiming refund of customs duty under Section 27 would not apply to the refund of EDD. The refund claim is within time and cannot be rejected on the ground of limitation – The impugned order is set aside and the appeal is allowed - Rejection of refund of EDD on the ground of unjust enrichment – HELD - The transaction between the appellant and their principal is a separate transaction whereby loan has been advanced by the principals to the appellant. The loan amount received by the appellant from their principal cannot be said to be the part of the transaction of clearance of the imported goods from Customs for which the burden of duty has been passed on to the recipients of the goods after clearance of the goods. In this case the recipient of the goods after clearance from the customs is the appellant-importer who has used these goods in their process of manufacture. For application of the principles of unjust enrichment, the burden should have been passed on to the party who is part of the same transaction, i.e. if the goods were sold after the importation to the buyer of the goods. As the burden of EDD deposited has been borne by the appellant as evidenced by the Certificate of chartered accountant, the impugned order whereby the refund of this amount has been rejected on the ground of unjust enrichment is quashed.
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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