Legal principle

Where no 'Out of Charge' order under Section 47(1) is passed and the amount paid is never appropriated towards any duty demand, the payment retains the character of a deposit rather than duty and is refundable, since the taxable event of import under Section 12(1) never occurred.

Court decision

The Tribunal set aside the impugned order and allowed the appellant's appeal with consequential relief, holding that in the absence of appropriation the amount deposited cannot be considered payment of duty but only a deposit, and the appellant was eligible for refund of the duty amount paid before the goods were issued 'Out of Charge' for home consumption.

Facts

Manyata Promoters Pvt Ltd imported 'Pillow and Duvet' made from duck feathers from China, filed a bill of entry under RMS and paid customs duty of Rs.34,43,500 with interest of Rs.9,906 (total Rs.34,53,406 paid on 22.09.2021). Objections were raised regarding compliance with Animal Quarantine & Certification Services (AQCS), and AQCS directed destruction/deportation as the goods did not comply with quarantine clearance. The Adjudicating Authority (Order-in-Original dated 22.06.2022) held the goods liable for confiscation, imposed a penalty of Rs.1,00,000 and allowed redemption for re-export/destruction on payment of a fine of Rs.1,00,000, with no demand of duty or appropriation of the amount paid; the goods were then destroyed. The appellant's refund claim was allowed by the Adjudicating Authority (Order-in-Original dated 13.03.2023), but on Revenue's appeal the Commissioner (Appeals) set it aside on 12.07.2024 invoking Section 26A(1), leading to the present appeal.

Key provisions

• Section 26A, Customs Act, 1962 — Refund of import duty in certain cases
• Section 47(1), Customs Act, 1962 — Clearance of goods for home consumption
• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 23(1), Customs Act, 1962 — Remission of duty on lost, destroyed or abandoned goods