2026-VIL-854-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs - Extra Duty Deposit - Refund and Interest on Delayed Refund – Respondents-assessee imported coal in bulk from a related party supplier and the B/E were provisionally assessed pending Special Valuation Branch investigation – Respondent deposited Extra Duty Deposit at one percent of the declared assessable value as per Board Circular - Upon completion of SVB investigation, the proper officer accepted the declared transaction value and directed finalization of all pending provisionally assessed bills of entry - Whether Extra Duty Deposit collected under Board circular in SVB cases constitutes duty within the meaning of the Customs Act or is merely a deposit, and whether the importer is entitled to interest on delayed refund of such deposit and if so, from what date – HELD – The Extra Duty Deposit is not a duty of customs as defined under the Customs Act but is in the nature of a deposit collected for the specific purpose of ensuring timely submission of information by the importer during SVB investigation so as to enable expeditious finalization of provisional assessment. Though its quantum is measured on the basis of declared assessable value, that measure does not convert its character into duty, since the obligation to pay it arises not from a charge under the taxing statute but from a Board Circular prescribing a security mechanism - Further, since Extra Duty Deposit is collected in the context of provisional assessment proceedings under Section 18 of the Customs Act, the mechanism for its refund and for payment of interest on delayed refund is governed by the provisions of Section 18 read mutatis mutandis with Section 27A. The self-contained machinery of Section 18 providing for adjustment and refund of excess amounts paid at the provisional assessment stage, along with interest for delay beyond three months from the date of final assessment, overrides the general refund provisions of Section 27 by virtue of the non obstante clause in Section 18 - The proper officer was not justified in treating the refund application as disposed of merely on account of non-finalization of provisional assessments. The delay in finalization of provisional assessments is entirely attributable to the Department and not to the importer, who had furnished all requisite documents and information. Since the SVB order accepting the declared transaction value had attained finality without being challenged by either side, there was no outstanding purpose for which the EDD could have been retained by the department, as it was not required to cover any deficiency in finally assessed duty - Interest is payable on the Extra Duty Deposit refund amount from the date of expiry of three months from the date of receipt of the refund application as originally submitted and acknowledged by the custom house, until the date of actual payment of the refund - The impugned order of the Commissioners (Appeals) granting such interest is upheld – The appeal filed by Revenue is dismissed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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