Legal principle

Section 26A of the Customs Act, 1962 applies only to goods imported for home consumption; duty on re-import of exported goods is governed by Notification No. 46/2017-Cus dated 30.06.2017, and an importer who repays the drawback with interest is not liable to CVD collected after GST introduction due to a system error, nor can such a claim be defeated by the Section 26A(2) limitation.

Court decision

The Tribunal dismissed the department's appeal, thereby upholding the Commissioner (Appeals)'s order allowing the refund to Sundaram Fasteners Ltd. It held that Section 26A applies only to goods imported for home consumption, while payment of duty on re-import of exported goods is governed by Notification No. 46/2017 dated 30.06.2017, and since the respondent had satisfied that Notification by repaying the drawback with interest, it was not liable to pay the duty demanded.

Facts

M/s Sundaram Fasteners Ltd. (Metal Forms Division, Hosur) exported automobile components and availed duty drawback of Rs. 2,81,327/-; when USA customers returned a portion of the components, the firm re-imported them, repaid the drawback with interest of Rs. 37,494/- and sought waiver of duties under Notification No. 46/2017-Cus dated 30.06.2017. Although CVD was not payable after the introduction of GST, the department, due to a system error, insisted on payment of CVD of Rs. 18,66,365/- (including E-cess and SHE cess) and released the goods against a bank guarantee of Rs. 32,35,605/- and a bond, after open examination confirmed the goods were the same as those exported. On completion of re-export, the respondent claimed refund of the duty paid on re-import, but the claim was rejected as barred by limitation under Section 26A(2) of the Customs Act, 1962. The Commissioner (Appeals) allowed the refund, and the Commissioner of Customs, Bangalore appealed to the Tribunal.

Key provisions

• Section 26A, Customs Act, 1962 — Refund of import duty in certain cases