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Cus - Restitution of amounts deposited towards security is not covered by time limit specified in section 27 of Customs Act: High Court

By TIOL News Service

CHENNAI, JUNE 20, 2017: THE CESTAT had by its order dated 05.08.2004 - 2004-TIOL-732-CESTAT-DEL while allowing the appeals of the importer held that the time limit specified in Section 27 of the Customs Act is not applicable to the refund of the amount realized by the Government by enforcing the bank guarantee, as this does not represent any duty under the Customs Act.

Revenue is in appeal against this order before the Madras High Court.

After considering the submissions made by both sides, the High Court observed thus -

+ Argument (by the Revenue counsel) that the Bank Guarantees were encashed towards payment of duty, is, completely fallacious, as the moment EODCs were furnished, the said EODC would relate back to the date, when, the import was made . The EODC's and other import documents, when read together, even according to the appellant, would demonstrate that respondent No.2 had complied with the conditions of Notification No.110/95 and, was, therefore, entitled to avail of the benefit of concessional rate of duty.

+ In our view, there is no error, in the approach adopted by the Tribunal. The reliance by the Tribunal on the judgment of the Supreme Court rendered in Oswal Agro Mills Limited - 2002-TIOL-629-SC- CX is also in order.

+ According to us, the ratio of the judgment (Oswal Agro Mills Limited) is that the purpose for which a Bank Guarantee is furnished has to be examined keeping in mind the background facts and the reason, why it was furnished in the first place. If the Bank Guarantee is furnished, as in this case, in the form of a security, towards fulfillment of an obligation, then surely, provisions of Section 27 of the Act will not apply.

+ In our opinion, what has to be borne in mind, is as to the nature of the amount deposited in whichever form. If, the amount deposited, is, towards security, surely, once the Assessee succeeds, he is entitled to seek restitution. Restitution, in such like circumstances, is not covered by Section 27 of the Act.

Relying on the decisions in JRAJ Exports (P) Limited - 2007-TIOL-786-HC-MAD-CUS, Aristo Spinners Pvt. Ltd. - 2008-TIOL-87-HC-MAD-CUS and Vamadev Exports - 2015-TIOL-1959-HC-MAD-CUS, the High Court concluded that the questions of law framed in the matter have to be answered in favour of the Assessee and against the Revenue.

The Revenue appeals were dismissed.

(See 2017-TIOL-1137-HC-MAD-CUS)


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