2026-VIL-1868-CESTAT-ALH-CU
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CUSTOMS CESTAT Cases

Customs - Refund of deposit - Limitation under Section 27(1A) of Customs Act, 1962 - Appellant imported goods which were alleged to be misdeclared and were warehoused in a public bonded warehouse. The case was decided in favour of the Appellant, but it was asked to file an ex-bond bill of entry for clearance and challenged this through a writ petition. The High Court directed the Appellant to deposit a sum in cash and furnish a bank guarantee for release of the goods. The writ petition was later dismissed for want of prosecution, with liberty to seek appropriate remedy for refund as permitted by law. The refund claim was rejected under Section 27(1A), and the FAA treated the deposit as payment of customs duty and held the claim time-barred - Whether the refund of the amount deposited as per the direction of the High Court is barred by the time limit under Section 27(1A) - HELD - The deposits were made as directed by the High Court to secure release of the goods. There was no assessment by the proper officer when the payments were made, and customs duty is not paid in the form of a bank guarantee. The duty liability was never finally determined, and the finding of the FAA that it stood final was only an inference. The amount deposited cannot be considered as payment of customs duty and is only a deposit towards prospective customs duty liability, if any. The time limit under Section 27(1A) is therefore not applicable. The refund was rejected only for non fulfilment of the conditions of Section 27(1A) and not on merits. When the amount deposited is not duty, the Department cannot retain it, and the bar of limitation cannot be pressed into service - The rejection of the refund is not sustainable, the impugned order is set aside and the appeal is allowed
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