CESTAT Chennai: Refund Limitation Cannot Begin Before Final Assessment Order Is Communicated to Importer

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 18.09.2026

CESTAT Chennai: Refund Limitation Cannot Begin Before Final Assessment Order Is Communicated to Importer

In an important ruling concerning the limitation period for Customs refunds arising from provisional assessments, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai has held that the one-year limitation under Section 27(1B)(c) of the Customs Act, 1962 must be reckoned from the date on which the order finalising the provisional assessment is communicated to the person entitled to claim the refund, and not merely from the date on which the order is passed.

The Tribunal dismissed the Revenue’s appeal against Tamilnadu Newsprint and Papers Ltd. (TNPL) and upheld the Commissioner (Appeals)’ finding that TNPL’s refund claim was not time-barred.

Background: ₹75.50 Lakh Refund Arising From Provisional Assessment

• TNPL had imported non-coking coal under Bill of Entry No. 3551653 dated October 17, 2013. The Bill of Entry was provisionally assessed because original documents and the test report were unavailable at the time of assessment.
• After the relevant documents were produced, the Assistant Commissioner of Customs, Nagapattinam finalised the assessment through Order-in-Original No. 35/2014 dated April 30, 2014. The finalisation resulted in a finding that TNPL had paid excess Customs duty of ₹75,50,539, which was ordered to be refunded.
• TNPL subsequently filed its refund claim dated May 13, 2015, received by Customs on May 15, 2015. After the Department issued a deficiency memo, the claim was resubmitted on June 4, 2015 and received on June 9, 2015.

Customs Department Rejected Refund as Time-Barred

• The Department took the position that the limitation period had commenced on April 30, 2014, when the provisional assessment was finalised.
• According to Customs, Section 27(1B)(c) specifically provides that where duty has been paid provisionally under Section 18, the one-year limitation period is computed from the date of adjustment of duty after final assessment.
• On that reasoning, even TNPL’s original filing in May 2015 was beyond one year from April 30, 2014. The adjudicating authority therefore rejected the refund as time-barred by Order No. 37/2015 dated September 2, 2015.

Commissioner (Appeals) Allowed TNPL’s Appeal

• The Commissioner (Appeals), however, set aside the rejection.
• It held that under Section 153 of the Customs Act, an order has to be communicated in the prescribed manner and that the relevant date for pursuing a remedial measure is the date on which the order is communicated to the affected person.
• The appellate authority relied upon CESTAT’s decision in Indian Oil Corporation Ltd. v. Commissioner of Customs, 2014 (308) E.L.T. 169 (Tri.-Del.).
• TNPL had also produced a postal cover bearing the postal authority’s seal and stamp as evidence regarding receipt of the finalisation order. The Department, on the other hand, could not establish an earlier date of communication. The Commissioner (Appeals) consequently directed the refund claim to be considered, prompting Revenue to approach CESTAT.

Core Question Before CESTAT

• The Tribunal identified the central issue as whether TNPL’s refund claim relating to duty paid provisionally under Section 18 was filed within the one-year limitation prescribed under Section 27(1B)(c).
• The Department argued for a literal construction: the statute refers to the date of adjustment following final assessment and does not expressly use the word “communication.”
• CESTAT, however, held that the provision could not be interpreted in isolation from the settled principles governing limitation where an affected person has to pursue a legal remedy.

Limitation Cannot Begin Before Party Knows About the Order

• The Tribunal placed significant reliance on the Supreme Court’s judgment in Collector of Central Excise, Madras v. M.M. Rubber & Co., 1991 (55) E.L.T. 289 (SC).
• CESTAT explained that the Supreme Court had distinguished between two situations.
• Where a statutory authority is required to exercise its own power within a prescribed period, limitation may run from the date the order is made because the authority cannot claim ignorance of its own action. But where limitation governs the right of an aggrieved person to pursue a remedy, actual or constructive knowledge of the order becomes essential.
• Applying that principle, CESTAT observed that TNPL was not the author of the final assessment order. It was the person required to act upon that order to recover excess duty. It would therefore be incongruous for the limitation period to begin running even before the order was communicated to it.

Gujarat High Court’s GAIL Ruling Followed

• The Tribunal found substantial support in Principal Commissioner of Customs, Ahmedabad v. GAIL (India) Ltd., (2024) 20 Centax 516 (Guj.).
• The Gujarat High Court had considered essentially the same question: whether the “date of service” of an order finalising provisional assessment is relevant for calculating limitation under Section 27(1B)(c), despite the statutory language referring to adjustment of duty after final assessment.
• The High Court decided the issue against Revenue and held that communication of the finalisation order to the assessee is a condition sine qua non for filing the refund claim within the prescribed period.
• Importantly, CESTAT also noted the Gujarat High Court’s finding that mere uploading of an assessment order on the Department’s portal, without more, would not satisfy the requirement of communication.
• CESTAT consequently held that the issue was no longer res integra.

One-Year Period Runs From Communication of Final Assessment Order

• The Chennai Bench crystallised the legal position in clear terms.
• It held that the one-year limitation prescribed under Section 27(1B)(c), for refund of duty paid provisionally under Section 18, runs from the date on which the order finalising the assessment is communicated to the person entitled to the refund, rather than from the bare date on which the finalisation order is passed.
• This distinction is significant for importers whose provisional assessments are finalised but where the resulting order is communicated after a delay.

Mere Dispatch Is Not Enough; Customs Must Prove Service

• CESTAT went further and examined what amounts to valid communication under Section 153 of the Customs Act.
• The Tribunal held that the Department must demonstrate actual communication in accordance with the prescribed statutory mechanism. Mere assertion that an order was dispatched is insufficient.
• It relied upon the Larger Bench ruling in Margra Industries Ltd. v. Commissioner of Customs, New Delhi, 2006 (202) E.L.T. 244 (Tri.-LB), which held that dispatch by post without proof of delivery does not constitute sufficient compliance where the special statute itself prescribes the manner of service.
• The Bench also relied upon the Madras High Court’s decision in Schiller Healthcare India Pvt. Ltd. v. Assistant Commissioner of Customs, 2021-TIOL-1357-HC-MAD-CUS, where the Court dealt with the hierarchy of modes of service contemplated under Section 153.

Burden of Proving Communication Lies on Revenue

• Another important principle emerging from the ruling concerns the burden of proof.
• Referring to its earlier ruling in Rane (Madras) Ltd. v. Commissioner of GST and Central Excise, Chennai South Commissionerate, along with the Chhattisgarh High Court’s decision in Vijay Pratap and the Supreme Court’s ruling in Saral Wire Craft Pvt. Ltd., the Tribunal held that the prescribed statutory method of service must be strictly followed.
• CESTAT stated that the burden of proving that an order adversely affecting an assessee has been served through the prescribed method rests on Revenue.

Section 153 Applies to Assessment Orders Too

• Revenue could also not escape the communication requirement merely because the order in question finalised a provisional assessment rather than being an adjudication order in the conventional sense.
• The Tribunal noted that Section 153 speaks of an “order or decision” without restricting its operation to adjudication orders.
• Further, provisional assessment falls within the definition of “assessment” under Section 2(2) of the Customs Act.
• Relying upon Commissioner of Customs (Export), Mumbai v. Goodwill Sales Pvt. Ltd., 2016 (343) E.L.T. 1193 (Tri.-Mumbai), CESTAT observed that although assessment and adjudication are conceptually distinct, both constitute orders or decisions for purposes of the Customs Act.

Revenue Failed to Prove Earlier Service

• On the facts, the Department could not produce evidence demonstrating that the finalisation order had been dispatched to TNPL by registered post, speed post or another method contemplated under Section 153, much less evidence establishing delivery on an earlier date.
• TNPL, in contrast, had produced the postal cover bearing the seal and stamp of the postal department.
• The Department’s suggestion that the postal cover might have contained some other correspondence was rejected by the Tribunal as a bare surmise unsupported by evidence.

Refund Claim Held Within Limitation

• After adopting the date of communication as the relevant starting point, the Tribunal found TNPL’s refund claim to be within the statutory limitation.
• The order records that, reckoned from the accepted date of communication, the one-year period expired on June 10, 2015. TNPL’s refund claim dated May 13, 2015 and received on May 15, 2015 was therefore within time.
• Even its resubmission after curing the deficiency—made on June 4 and received by Customs on June 9, 2015—fell within the one-year period.

Revenue’s Appeal Dismissed

• CESTAT ultimately found no error in the Commissioner (Appeals)’ conclusion that TNPL’s refund claim was not barred by limitation.
• Accordingly, the Tribunal dismissed the Revenue’s appeal and upheld Order-in-Appeal No. 91/16-TRY(CUS) dated April 5, 2016, with consequential relief in accordance with law. Thus, Tamilnadu Newsprint and Papers Ltd. succeeded before CESTAT on the limitation issue.

Why the Ruling Matters for Importers

The judgment has practical significance beyond TNPL’s individual refund claim. It reinforces that an importer cannot ordinarily be deprived of a statutory remedy by allowing limitation to run from an order that has not been properly communicated to it.

The decision is particularly relevant in cases involving provisional assessment under Section 18, refund applications under Section 27, and disputes regarding service or communication under Section 153 of the Customs Act.

The ruling also underscores a crucial evidentiary point for Customs proceedings: where Revenue relies on an earlier date of service to defeat a claim on limitation, the burden of establishing proper communication through the statutorily prescribed mode rests upon the Department.

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Source: CESTAT Chennai

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi