Extra Duty Deposit Should Be Refunded Without Filing Refund Claim: CESTAT

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that if and when the refund claim of EDD is filed by the appellant, it cannot be barred by limitation.

The appellant was engaged in the import of "Silicon Electrical Steel of Cold Rolled Full Hard (unannealed)" from M/s. China Steel Corporation India Pvt. Ltd. Since the goods were imported from a related entity, the issue of valuation was taken up by the Special Valuation Branch (SVB) in terms of Circular No.11/2001-Cus dated 23.02.2001. The circular was an amendment to the earlier circular 1/1998 dated January 1, 1998. The circular was related to procedure regarding cases handled by the Special Valuation Branch of the Custom House. The circulars provided for the assessment of certain types of cases to be examined by the Special Valuation Branch of the custom houses. During the pendency of the investigation, the circulars provided for a 1% Extra Duty Deposit as a safeguard for revenue.

The appellant imported the goods from a related entity in Taiwan. The matter was referred to the Special Valuation Branch and during pendency of the investigation the appellant deposited 1% Extra Duty Deposit. The assessment was finally approved at the declared assessable value. Therefore, the Extra Duty Deposit paid by the appellant became refundable to them. The circular also prescribes that during the pendency of investigation by SVB, assessment would be done on a provisional basis. Since the decision of the Special Valuation Branch came in favour of the appellant and the price declared by the appellant was accepted by the revenue the amount of Extra Duty Deposit paid by the appellant became refundable to them. Since the order accepting the declared value was passed on 04.02.2016 and refund claim was filed on 24.01.2018, a show cause notice dated 13.03.2018 was issued seeking to reject refund claim on the grounds of limitation.

The appellant argued that the order was non-speaking and passed without application of mind. The 1% EDD, paid by the appellant as per Circular No.11/2001-Cus during the provisional assessment of the bills of entry, is only a security deposit and not a payment of duty. Since it is not a payment of duty, the provision of Section 27 will not apply to the refund claim filed by the appellant. Section 27 of the Customs Act is not applicable to the refund of 1% EDD paid in terms of Circular No.11/2001-Cus.

The CESTAT allowed the appeal of the appellant.

Case Title: China Steel Corporation India Pvt Ltd Versus C.C.-Ahmedabad

Citation: Customs Appeal No.10164 of 2019

Dated: 26.07.2022

Counsel For Appellant: Advocate Chirag Shetty

Counsel For Respondent: AR J A Patel

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