Case law

Custom, Excise & Service Tax Tribunal · 4 Jan 2023

Elan Electronics India vs Commissioner, Customs-New Delhi

Legal principle

Where imported goods are re-exported without ever being cleared for home consumption, the amount deposited in the name of customs duty is not 'duty' but an unauthorisedly retained deposit, so the limitation of section 27(1) does not apply and the refund is available immediately after the order of re-export.

Court decision

The Tribunal allowed the appeal, holding that the Commissioner (Appeals) wrongly invoked section 27(1) to reject the refund claim as time barred and that section 26A(1) was not applicable to the facts. It set aside the order and held the appellant entitled to the refund of Rs.7,76,205 along with interest at 6% from the date of payment until sanction of the refund.

Facts

Elan Electronics India imported 54 sets of battery-operated rickshaws in CKD condition (without battery and charger) at ICD TKD vide Bill of Entry No. 4233121 dated 31.12.2013, declaring assessable value of Rs.16,82,163 and depositing customs duty of Rs.7,76,205 on 03.01.2014 with the Bill of Entry for home consumption. On scrutiny, the goods were found to require a certificate of compliance under Rule 126 of the Central Motor Vehicle Rules, 1989, which the importer did not have, so it requested re-export of the goods to a third country (UAE/Dubai) by letter dated 29.9.2014 while the goods were still in the customs area. The Bill of Entry was amended from 'home' to 'warehouse' under sections 59 and 69 of the Customs Act, 1962, a penalty of Rs.50,000 under section 112(a) was imposed by order dated 14.10.2014, a 'let export' order followed, and the goods were re-exported. The importer's refund claim of Rs.7,76,205 filed on 28.5.2015 was rejected on 4.10.2017 as barred by time under section 27(1) and Explanation A of section 26A(2), and the Commissioner (Appeals) upheld the time-bar finding while accepting that section 26A(2) did not apply.

Key provisions