Department Recovering Tax Without Any Authority Of Law Cannot Be Permitted To Retain The Amount: CESTAT

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that just as an assessee cannot be permitted to evade payment of rightful tax, the authority that recovers tax without any authority of law cannot be permitted to retain the amount merely because the taxpayer was not aware at that time.

The bench of Binu Tamta (Judicial Member) has observed that the date on which the prayer for reassessment and refund of excess duty paid was made has to be treated as the date on which the refund claim has been made, and therefore it was within the period of limitation of one year as prescribed under Section 27 of the Customs Act.

The appellant filed the bill of entry for the import of "heavy melting steel scrap" under CTH 72044900 and paid 15% BCD. The appellant was eligible for an exemption of 2.50% BCD in terms of Notification No. 50/2017-Cus. dated June 30, 2017, under Sl. No. 368.

The appellant requested the Deputy Commissioner of Customs, Jaipur, to reassess the bill of entry and refund the excess duty paid by them. It appears that, in terms of the letter, the authority reassessed the bill of entry but failed to refund the amount to the appellant that accrued by virtue of the reassessment.

The appellant then submitted a reminder letter dated April 29, 2019, once again requesting the processing of their claim for a refund. Taking the representation dated April 29, 2019, as the refund claim in terms of the reassessment, the Department issued a show cause notice dated April 5, 2019, treating the refund claim as having been filed beyond one year from the date of the reassessment dated February 24, 2018. Therefore, it was barred in terms of Section 27 of the Customs Act. In reply, the appellant submitted that a refund claim was filed by them on January 23, 2018, but the Department neither processed the refund claim nor issued any deficiency thereto.

The appellant submitted that they filed the request for reassessment along with the refund of excess duty paid by them as early as January 23, 2018, and the subsequent letter dated April 29, 2019, was merely a reminder as the authorities have not processed their refund claim nor pointed out any deficiency. The authority that reassessed the bill of entry on February 24, 2018, did not refer to the claim for a refund made by the appellant under the same letter.

The department contended that the refund claim could have been made after the reassessment order was passed on February 24, 2018, and so it was only on April 29, 2019, that they made the refund claim, which was barred by limitation under Section 27 of the Customs Act.

The tribunal held that the authorities below wrongly arrived at the decision that the refund claim was made by the appellant on April 29, 2019, and it was barred by time, being beyond the period of one year from the date of reassessment on February 24, 2018.

Case Title: M/s Synergy Steels Ltd. Versus Commissioner of Customs

Case No.: Customs Appeal No. 51760 of 2023

Date: 02.05.2023

Counsel For Petitioner: Mohit Gohlyan

Counsel For Respondent: Gopi Raman

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