Refund of Duty paid under Protest - Whether time limit of 6 months under 4th Proviso of section 27(1) of Customs Act, 1962 applicable?

PJ/Case Laws/2012-13/1056

Case: REDINGTON INDIA LTD. Vs. COMMISSIONER OF CUSTOMS, CHENNAI

Citation: 2011 (269) E.L.T. 233 (Tri.- Chennai)

Issue:- Whether time limit of six months for refund claim prescribed under forth proviso of Section 27(1) of the Customs Act 1962 apply when assessee paid duty under protest and thereafter matter of dispute decided in their favour?

Brief Facts:- The protest was lodged by the appellant challenging the assessment made by the Department and claiming nil rate of duty. The dispute of assessment was decided by the Lower Appellant Authority on 24.5.2007 by virtue of which the appellants become eligible for refund of the impugned amount in the respect if the impugned three Bills of Entry. The appellant filed a refund claim only on 21.2.2008. The Original Authority has rejected the refund claim filled by the appellants in respect of three Bills of Entries holding the same to be time-barred. The Lower Appellant Authority has rejected the appeal of the appellants against the said Order-in Original leading to this appeal.

Appellant’s Contention:- Appellant states that in respect of three Bills of Entry the appellant has paid the duty under protest on 27.12.2006.

He argues that in respect of amount paid under protest, the time limit prescribed under section 27 The Customs Act, 1962 does not apply hence the Authority have wrongly rejected the refund claim Of the appellants as time-barred. He also refers to the department Manual which states that for duty paid under protest, the time limit of six months does not apply.

Respondent’s Contention:- Revenue states that the protest lodged by the appellants automatically gets vacated after the assessment dispute is decided finally by the Lower Appellate Authority. He also states that the protest does not entitle the appellants to claim a refund without any time limit. He cites the specific provision in the fourth proviso to sub-section (1) of the section 27 under which the time limit of six months is applicable from the date of the order of the Appellate Authority.

Reasoning of Judgement:- The main provision under Section 27(1) requires a refund claim to be filled within six months from the date of payment of duty. The second proviso to Section 27 (1) states that the limitation of Six month shall not apply where any duty has been paid under protest. Subsequently the forth proviso states that where the duty becomes refundable as a consequence of any judgement, degree, order or direction of the Appellate Authority, Appellate Tribunal or any Court, the limitation of six months shall be computed from the date of such judgement, degree, order or direction. Both these provisions require to be read harmoniously.

It was held that in this case, the protest was lodged by the appellants challenging the assessment made by the Department and claiming nil rate of duty. The dispute in assessment came to finality once the matter was decided in favour of the appellants by the lower appellant authority and the department choose not to file any further appeal against the same. Once the very cause of the protest came to an end by the resolution of the assessment dispute at the hands of the Lower Appellate Authority, it cannot be held that the protest would survive beyond the date of the order passed by the lower appellate authority in favour of the appellants. Thereafter, it was the duty of the appellants to take steps to file necessary refund claims within the time limit prescribed. The forth proviso prescribing limitation of six months from the date of a judgment order of the appellate authority, applicable in this case. The appellant had only six months time from 24.5.2007(Date of decision in favour of the appellant) to file a refund claim.

Decision:- Appeal dismissed.

Comment:- This is a very good decision in favour of revenue. The refund should be filed within one year from the date of decision of the authorities. If the refund is not filed within the time limit then it will be time barred.

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PJ/Case Laws/2012-13/1056

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