Legal principle

Amounts deposited 'under protest' at the appellate stage, in the nature of a pre-deposit under Section 131 of the Customs Act, 1962, must be refunded without invoking the unjust enrichment bar or limitation of Section 27, with interest at the rates notified under Section 129EE.

Court decision

The Madras High Court allowed the writ petition and set aside the impugned Order-in-Appeal, holding that the 2nd respondent was not justified in subjecting the petitioner to the limitation of Section 27; the payment of 21.03.2001 was in the nature of a pre-deposit under Section 131 of the Customs Act, 1962, refundable without insisting on unjust enrichment. The 2nd respondent was directed to calculate and pay the refund of Rs.88,44,510 within three months, with interest at the rates notified from time to time under Section 129EE (not the 12% prayed for), payable on the sum for the period commencing after expiry of three months from the Supreme Court's order dated 31.03.2005.

Facts

The Daily Thanthi imported printing machinery and claimed exemption under Customs Notification No.114/1980-Cus on three bills of entry assessed and cleared under Section 17 of the Customs Act, 1962 during 1986-87. The department later issued three show cause notices under Section 28 to deny the exemption and demand differential duty, which the Commissioner confirmed by order dated 15.06.1988. CEGAT (Final Order Nos.203-205/2000 dated 07.02.2000) set aside the Rs.41,17,258 demand as time-barred but confirmed Rs.88,44,510 on the other two imports. After a recovery notice dated 29.09.2000, the petitioner paid Rs.88,44,510 'under protest' on 21.03.2001 pending its appeals before the Supreme Court, which allowed the appeals on 31.03.2005. The petitioner's subsequent refund claim was sanctioned but ordered credited to the Consumer Welfare Fund, and the Commissioner (Appeals) remanded the matter de novo on whether the duty incidence had been passed on.

Key provisions

• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 129E, Customs Act, 1962 — Deposit of certain percentage of duty demanded or penalty imposed before filing appeal
• Section 131, Customs Act, 1962 — Sums due to be paid notwithstanding reference etc
• Section 17, Customs Act, 1962 — Assessment of duty
• Section 11B, Customs Act, 1962 — Power of Central Government to notify goods
• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 12, Customs Act, 1962 — Dutiable goods
• Section 28C, Customs Act, 1962 — Price of goods to indicate the amount of duty paid thereon
• Section 129(1), Customs Act, 1962 — Appellate Tribunal
• Section 129EE, Customs Act, 1962 — Interest on delayed refund of amount deposited under section 129E
• Section 19, Customs Act, 1962 — Determination of duty where goods consist of articles liable to different rates of duty