ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.08.2025
CESTAT Mumbai- Refund of Encashed Bank Guarantee Not Subject to Limitation Under Section 27 β β
In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has set a precedent in the case of Oswal Industries Limited vs. Commissioner of Customs (Import). The Tribunal addressed the critical issue of whether a bank guarantee encashed by the Revenue during the pendency of an appeal can be treated as “payment of duty” under Section 27 of the Customs Act, 1962. β This decision has far-reaching implications for businesses dealing with customs disputes and provisional releases.
Background of the Case
Oswal Industries Limited had imported goods in 2003, which were provisionally released against a bond and a bank guarantee of Rs. β 10 lakhs. β A dispute arose, leading to a demand for customs duty, which was confirmed by the Order-in-Original in 2006. β During the pendency of Oswal’s appeal before the Tribunal, the Revenue encashed the bank guarantee and deposited the amount in the government treasury. β
In 2016, the Tribunal ruled in favor of Oswal Industries, setting aside the demand for customs duty. Subsequently, Oswal filed an application for a refund of the encashed bank guarantee. β However, the refund application was rejected by the Adjudicating Authority and later by the Commissioner (Appeals), citing the limitation period under Section 27 of the Customs Act.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: CESTAT Mumbai
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