The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that the refund of Extra Duty Deposit ( EDD ) is not subject to the limitation under Section 27 of the Customs Act, 1962, and should be returned upon finalization of provisional assessments without requiring a formal refund claim.
Herrenknecht India Pvt. Ltd., the appellant, imported Tunneling Boring Equipment and components through 31 Bills of Entry ( BOE ), which were provisionally assessed with the payment of EDD. The appellant filed a refund claim for Rs. 26,79,183 towards EDD after the final assessment.
The refund claim was rejected by the Original Authority on grounds of limitation under Section 27(1) of the Customs Act for non-submission of the original TR6 challan for one BOE. The Commissioner of Customs (Appeals) upheld this rejection.
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Aggrieved by the Commissioner’s order, the appellant approached the CESTAT. The appellant argued that the EDD was a security deposit and not a tax, so it does not attract limitation under Section 27 of the Customs Act. The counsel explained that as per judicial precedents and CBEC Circular No. 5/2016 such deposits must be refunded post-final assessment without requiring a formal claim.
The appellant’s counsel further argued that the Special Valuation Branch (SVB) report of 2018 confirmed that the transactions were not influenced by their relationship with the supplier.
The revenue counsel countered that the refund claim was time-barred under Section 27(2) of the Customs Act. It argued that the absence of a TR6 challan further invalidated the refund claim.
The single-member bench comprising M. Ajit Kumar (Technical Member) observed that EDD was a security deposit and not a tax, so the refund was not covered under Section 27 of the Customs Act’s limitation. The tribunal cited the CBEC Circular and relied on the Madras High Court ruling in Commissioner of Customs (Export), Chennai v. Sayonara Exports Pvt. Ltd., which held that refunds of EDD do not require a formal claim.
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The tribunal ruled that the department was obligated to refund the EDD after the final assessment and rejected the impugned order. For the BOE missing the TR6 challan, the tribunal directed the department to process the refund upon submission of an indemnity bond, as per departmental procedure. The appeal was allowed with consequential relief.
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