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Tag: #Refunds

  • Madras High Court Upholds Importer’s Right to Rectification and Refund for Clerical Errors in Customs Duty Assessment

    Madras High Court Upholds Importer’s Right to Rectification and Refund for Clerical Errors in Customs Duty Assessment

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 26.06.2026

    Madras High Court Upholds Importer’s Right to Rectification and Refund for Clerical Errors in Customs Duty Assessment

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The recent judgment by the Madras High Court in the case involving M/s. Volvo India Pvt. Ltd. and the Customs Department provides significant clarity on the correction of clerical errors in customs duty assessments. This article explores the background, legal principles, and implications of the case, offering valuable insights for importers, customs professionals, and legal practitioners.

    Case Background

    M/s. Volvo India Pvt. Ltd., an importer of automobile components, faced an issue when a supplier’s typographical error led to an inflated freight charge on an invoice. This error resulted in excess customs duty being paid upon import through Chennai Port. The error was later acknowledged by the supplier, who issued a credit note and a certificate clarifying the mistake. Volvo India sought correction of the Bill of Entry and a refund of the excess duty paid.

    Legal Journey

    1. Initial Assessment and Appeal
      • The customs assessment was provisional, pending investigation by the Special Valuation Branch (SVB).
      • Volvo India requested correction under Section 154 of the Customs Act, 1962, and a refund of Rs. 3,79,637.
      • The lower authority denied the request, stating that the refund claim was premature as the assessment was not finalized.
      • The Commissioner (Appeals) upheld this view, emphasizing that the refund could only be claimed after finalization of the provisional assessment.
    2. CESTAT Ruling
      • Volvo India appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which allowed the appeal.
      • CESTAT held that clerical errors could be corrected under Section 154 at any time, even during provisional assessment, and that the importer was entitled to a refund subject to the test of unjust enrichment under Section 27(2).
    3. High Court Decision
      • The Customs Department challenged the CESTAT order in the Madras High Court.
      • The High Court affirmed that Section 154 allows correction of clerical or arithmetical mistakes “at any time,” including during provisional assessment.
      • The Court cited precedents supporting the view that such corrections are permissible and that the right to seek amendments is not lost due to the provisional nature of the assessment.
      • The appeal by the Customs Department was dismissed, upholding the importer’s right to correction and refund.

    Key Legal Principles Established

    1. Section 154 of the Customs Act, 1962
      • Allows correction of clerical or arithmetical mistakes, or errors from accidental slips or omissions, in any customs decision or order at any time.
      • Such corrections can be made even during provisional assessments.
    2. Right to Refund
      • Importers can claim refunds for excess duty paid due to clerical errors, subject to the provisions of Section 27(2) (unjust enrichment).
    3. No Need for Separate Appeal
      • Corrections under Section 154 do not require a separate appeal process; the assessing authority can amend the order directly.

    Implications for Importers and Customs Authorities

    • For Importers:
      • Provides a clear remedy for correcting genuine clerical errors in customs documentation, ensuring that excess duties paid due to such errors can be recovered.
      • Reinforces the importance of promptly identifying and documenting errors, including obtaining supporting evidence from suppliers.
    • For Customs Authorities:
      • Emphasizes the duty to maintain accurate records and to correct errors when brought to their attention.
      • Clarifies that provisional assessments do not preclude corrections under Section 154.

    Conclusion

    The Volvo India judgment underscores the flexibility and fairness built into the Customs Act, 1962, for addressing clerical errors. By affirming the right to correct such errors and claim refunds, the courts have reinforced the principle that tax assessments must reflect the true state of affairs, not be rigidly bound by procedural technicalities. This case serves as a valuable precedent for similar disputes in the future.

    Connected Matter

    Madras High Court Allows Amendment of Bills of Entry and Refund of Customs Duty for Erroneous Classification

    Source: Madras High Court

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  • CESTAT Mumbai Ruled on Customs Valuation, EDD Refunds, and Interest for Delayed Payments

    CESTAT Mumbai Ruled on Customs Valuation, EDD Refunds, and Interest for Delayed Payments

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 17.06.2026

    CESTAT Mumbai Ruled on Customs Valuation, EDD Refunds, and Interest for Delayed Payments

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a significant judgment in the case of Vardhman Acrylics Limited (VAL) concerning customs valuation, provisional assessments, and the refund of Extra Duty Deposit (EDD) with interest. This article provides a detailed overview of the case, the legal issues involved, and the implications for importers dealing with related party transactions and customs procedures in India.

    Background of the Case

    Vardhman Acrylics Limited, a manufacturer of acrylic fibre and tow, imported equipment from Marubeni Corporation, Japan, under an Equipment Supply Contract. Since the supplier was a related party, customs authorities provisionally assessed the imports, pending a detailed valuation review by the Special Valuation Branch (SVB) in Mumbai. VAL was required to pay EDD (1% to 5% of the declared value) as security, as per CBEC Circular No. 1/1998, and execute bonds for provisional clearance.

    Chronology of Events

    1. Provisional Assessment and EDD Payment (1997-1998):
      • VAL filed multiple Bills of Entry for imported equipment.
      • Customs authorities provisionally assessed the goods, requiring EDD and bonds.
    2. SVB Investigation and Finalization (1998):
      • SVB accepted the declared transaction value, finding no undue influence from the related party relationship.
      • Orders directed finalization of assessments and refund of EDD, subject to conditions.
    3. Litigation and Refund Applications (1999-2015):
      • VAL filed refund claims for EDD.
      • The department appealed the SVB order, leading to prolonged litigation before the Commissioner (Appeals), CESTAT, and the Bombay High Court.
      • After multiple rounds of appeals and remands, the refund was finally sanctioned in 2015, but without interest.
    4. Appeal for Interest on Delayed Refund (2019-2026):
      • VAL appealed for interest on delayed refund under Section 27A of the Customs Act, 1962.
      • The Commissioner (Appeals) rejected the claim, leading to the present appeal before CESTAT Mumbai.

    Key Legal Issues Examined

    1. Nature of Extra Duty Deposit (EDD)

    • EDD is a deposit collected to ensure timely submission of documents during SVB investigations, not a customs duty per se.
    • However, if not required for final duty adjustment, EDD is refundable to the importer.

    2. Applicability of Interest on Delayed Refund

    • Section 27A of the Customs Act mandates interest on refunds not made within three months of a valid application.
    • The Tribunal held that interest applies to EDD refunds as well, since EDD is collected in connection with provisional assessments under Sections 17 and 18.

    3. Unjust Enrichment

    • Refunds are subject to the doctrine of unjust enrichment; the importer must prove the burden was not passed on to consumers.
    • VAL demonstrated through financial records that the EDD was not capitalized or passed on, satisfying this requirement.

    4. Timelines and Departmental Delays

    • CBEC instructions require finalization of provisional assessments within six months.
    • In this case, the department delayed finalization and refund for several years, despite complete applications from VAL.

    Tribunal’s Findings and Order

    • The Tribunal found that VAL was entitled to a refund of EDD, and the department’s delay in processing the refund warranted payment of interest under Section 27A.
    • The period for interest calculation starts three months after the date of the final assessment order (March/May 2008) until the actual refund date (November 2015).
    • The Tribunal set aside the impugned order and allowed VAL’s appeal for interest on the delayed refund.

    Implications for Importers

    1. EDD Refunds: Importers who pay EDD during provisional assessments are entitled to refunds if the final assessment does not require adjustment, provided they meet the unjust enrichment test.
    2. Interest on Delayed Refunds: Departments must process refunds within three months of a valid claim; otherwise, interest is payable.
    3. Provisional Assessment Finalization: Customs authorities are expected to finalize provisional assessments promptly, and delays can lead to financial liabilities for the department.
    4. Documentation: Maintaining clear financial records and demonstrating that the refund amount was not passed on is crucial for overcoming unjust enrichment objections.

    Conclusion

    The CESTAT Mumbai’s decision in the Vardhman Acrylics case clarifies the treatment of EDD, the obligation of customs authorities to process refunds promptly, and the rights of importers to interest on delayed refunds. This judgment reinforces the importance of procedural compliance by both importers and customs authorities and provides a valuable precedent for similar disputes in the future.

    Connected Matter

    Madras High Court Quashes Customs Department’s Rejection of EDD Refund

    Source: CESTAT Mumbai

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  • Gujarat High Court Orders Customs Duty Refund to SEZ Unit

    Gujarat High Court Orders Customs Duty Refund to SEZ Unit

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 10.06.2026

    Gujarat High Court Orders Customs Duty Refund to SEZ Unit

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    Devharsh Infotech Private Limited, following its amalgamation with Lucky Forms Private Limited, sought a refund of the special additional duty (SAD) of customs paid on imported goods at its Surat Special Economic Zone (SEZ) unit. The company had imported six consignments of thermal paper reels, paid 4% SAD, and subsequently sold these goods into the domestic tariff area without passing on the duty burden. Relying on Customs Notification No. 102/2007-Cus, the company filed for a refund of the SAD.

    Chronology of Events

    1. Initial Rejection: The refund claim was rejected by the Specified Officer of the Surat SEZ in August 2011, citing the absence of provisions in the SEZ Act and Rules for such refunds.
    2. Appeal and Remand: The Appellate Commissioner annulled this rejection in October 2012, stating the Specified Officer lacked jurisdiction and the matter should be referred to higher authorities.
    3. Further Delays: Despite repeated communications and a favorable order from the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in August 2016, which clarified that jurisdictional Customs and Central Excise authorities could process such refunds, the company’s requests went unanswered.
    4. Legal Action: Frustrated by inaction, Devharsh Infotech approached the Gujarat High Court in April 2019, seeking a writ to compel authorities to adjudicate and pay the refund with interest.

    Court’s Observations

    • The Court noted the petitioner was repeatedly sent from one authority to another, despite clear legal provisions and administrative clarifications issued in 2016 and 2017.
    • The authorities failed to act even after the CESTAT’s order and a government circular clarified the refund process and responsible officers.
    • The Court criticized the “apathy and carelessness” of the officials involved, emphasizing that such delays amounted to judicial indiscipline and undermined the rights of legitimate claimants.

    Judgment and Directions

    • The Gujarat High Court allowed the petition, directing the respondents (Union of India and related authorities) to decide and pay the refund claim, including interest, within six weeks of receiving the order.
    • The Court also instructed that the refund be disbursed electronically and warned that erring officers could face stringent action for shirking their responsibilities.
    • While the Court considered imposing costs on the authorities for the delay, it refrained after the government counsel explained the confusion was due to frequent changes in officers and initial lack of clarity in the law.

    Significance

    This judgment reinforces the obligation of government authorities to act promptly and fairly in processing refund claims, especially when legal and procedural clarity exists. It also highlights the judiciary’s willingness to hold officials accountable for undue delays and to protect the rights of businesses operating within SEZs.

    The case serves as a precedent for similar refund disputes, ensuring that SEZ units are not denied legitimate dues due to administrative inertia or misinterpretation of the law.

    Connected Matter

    CESTAT Chennai Delivers Relief to Importer: Substantive Compliance Prevails Over Procedural Lapses in SAD Refund

    Source: Gujarat High Court

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  • CESTAT Mumbai Orders Interest on Delayed Customs Refund from Original Refund Application Date

    CESTAT Mumbai Orders Interest on Delayed Customs Refund from Original Refund Application Date

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 11.05.2026

    CESTAT Mumbai Orders Interest on Delayed Customs Refund from Original Refund Application Date

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    In a significant decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai delivered a judgment in favor of PNP Polytex Pvt Ltd regarding the grant of interest on delayed customs duty refunds. This article provides a detailed overview of the case, the legal issues involved, the Tribunal’s reasoning, and the broader implications for importers and the customs administration.

    Background of the Case

    The dispute traces back to 2003, when PNP Polytex Pvt Ltd imported PVC coated cloth and paid various duties, including a 5% duty under Goods of Special Importance (GSI). Later, the company discovered that, as per Notification No. 7/2003-CE dated 01.03.2003, the GSI duty was not applicable to their imports. Consequently, PNP Polytex filed appeals against the assessment of seventeen Bills of Entry, which were decided in their favor by the Commissioner (Appeals) on 31.03.2004. The company was granted consequential relief, and the department’s review petition was rejected.

    In 2004, PNP Polytex filed seventeen refund applications totaling Rs. 48.28 lakhs. Despite repeated follow-ups and submission of documents, the refund process was marred by delays, deficiency memos, and requests for resubmission of documents over the next 14 years.

    Key Legal Issue: Entitlement to Interest on Delayed Refund

    The central issue before the Tribunal was not the legality of the refund itself, but the period from which interest on the refunded amount should be calculated. The department granted interest only from 20.03.2018 (three months after the last clarification was provided in December 2017) until the refund was sanctioned on 01.11.2018. PNP Polytex contended that interest should be paid from three months after the original refund applications were filed in June 2004, as per Section 27A of the Customs Act, 1962.

    Timeline of Events

    • 2003: Import of goods and payment of duties, including GSI.
    • 2004: Appeals filed and decided in favor of PNP Polytex; refund applications submitted.
    • 2004–2018: Multiple deficiency memos, repeated submissions, and prolonged departmental delays.
    • 01.11.2018: Refund of Rs. 38,94,277 sanctioned (after re-assessment).
    • 2021: Commissioner (Appeals) confirms interest only from 2018.
    • 2026: CESTAT Mumbai modifies the order, granting interest from three months after the original refund application date.

    Tribunal’s Reasoning and Findings

    The Tribunal, led by Member Judicial, made several critical observations:

    • Acknowledgment of Timely Filing: The Tribunal found that PNP Polytex had filed all seventeen refund applications within the stipulated period in 2004, and these were duly acknowledged by the customs department.
    • Departmental Delays: The Tribunal criticized the department for issuing deficiency memos at intervals of several years and for not processing the refund applications in a timely manner, despite having all necessary documents, including Chartered Accountant certificates, on multiple occasions.
    • Statutory Mandate: Section 27A of the Customs Act, 1962, clearly states that if a refund is not made within three months of the application, interest must be paid from the expiry of that period until the date of refund.
    • Judicial Precedents: The Tribunal relied on Supreme Court decisions (e.g., Ranbaxy Laboratories Ltd. v. Union of India, Hamdard (Waqf) Laboratories case) which held that interest is payable from three months after the date of the original refund application, not from the date of subsequent clarifications or document submissions, unless the application was found deficient and returned within ten working days.
    • No Valid Deficiency Memo: Since the department did not issue a valid deficiency memo or return the application within the prescribed period, the Tribunal held that the interest must be calculated from three months after the original application date.

    The Final Order

    The CESTAT Mumbai allowed the appeal and modified the Commissioner’s order, directing the customs department to pay interest at the applicable rate on the refunded amount from three months after 02.06.2004 (the date of the original refund applications) until the date of refund (01.11.2018). The department was ordered to pay the interest within two months of receiving the order.

    Implications and Takeaways

    • For Importers: This ruling reinforces the right of importers to timely refunds and interest on delayed payments, provided their applications are complete and acknowledged.
    • For Customs Administration: The decision underscores the importance of prompt processing of refund claims and adherence to statutory timelines. Delays and repeated deficiency memos without valid grounds can result in financial liability for interest.
    • Legal Clarity: The judgment clarifies that the date of the original, acknowledged refund application is crucial for calculating interest, unless the department promptly identifies and communicates deficiencies.

    Conclusion

    The CESTAT Mumbai’s decision in the PNP Polytex case is a landmark for importers seeking justice in delayed refund matters. It highlights the need for administrative efficiency and strict compliance with statutory provisions, ensuring that taxpayers are not penalized for departmental inaction. Importers facing similar issues can rely on this precedent to claim their rightful interest on delayed refunds.

    Source: CESTAT Mumbai

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  • CESTAT Ahmedabad Allows Refund to Ship Recyclers

    CESTAT Ahmedabad Allows Refund to Ship Recyclers

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 07.11.2025

    CESTAT Ahmedabad Allows Refund to Ship Recyclers

    This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

    In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has ruled in favor of M/s Dynamic Ship Recyclers Pvt. Ltd. and other appellants in a series of refund appeals. ​ The judgment, delivered on November 4, 2025, marks a significant win for the appellants in their long-standing battle against the rejection of refund claims by the department.

    Background of the Case

    The case revolves around the import of a vessel, MT Falcon Spirit, by M/s Dynamic Ship Recyclers Pvt. ​ Ltd. for breaking and recycling purposes. The company filed a refund claim of Rs. ​ 8,23,782 on April 16, 2024, under Section 27 of the Customs Act, 1962. ​ The dispute arose over the classification of fuel and oil contained in the vessel’s bunker tanks. ​ Initially, the department assessed the duty on these items under Chapter 27, separate from the vessel itself. ​ However, following a previous CESTAT order, the Assistant Commissioner of Customs, Bhavnagar, issued a Final Assessment Order on March 20, 2024, stating that the bunker tanks containing oil should be treated as part of the vessel’s machinery and classified under CTH 8908, along with the vessel. ​

    Despite this favorable assessment, the department rejected the refund claims, citing the bar of unjust enrichment under Section 11B of the Customs Act. ​ The appellants, led by Dynamic Ship Recyclers Pvt. ​ Ltd., challenged this decision, arguing that they had not passed on the incidence of customs duty to any other party. ​

    Key Arguments by the Appellants ​

    The appellants presented compelling evidence to support their claims, including:

    1. Sales Data: A comparison of the Bill of Entry with the sales invoices demonstrated that the bunkers were sold at a price below the import price/value on which the duty was assessed. ​ This indicated that the appellants had not recovered the cost of the bunkers, let alone the duty paid on them. ​
    2. Chartered Accountant Certificate: The appellants submitted a certificate from M/s B.R. ​ Popat & Co., Chartered Accountants, which confirmed that the incidence of customs duty paid on the bunkers had not been passed on to any other party. The certificate also stated that the duty was shown as “Customs Duty Receivable” in the company’s accounts. ​
    3. Legal Precedents: The appellants cited several judicial rulings, including Business Overseas Corporation v. CCE (Import and General) New Delhi and Commissioner Central Excise v. Flow Tech Power, which established that selling goods below cost and providing a Chartered Accountant certificate are sufficient to rebut the presumption of unjust enrichment. ​

    The Tribunal’s Observations and Decision

    After considering the submissions and evidence, the Tribunal concluded that the appellants had successfully demonstrated that the bar of unjust enrichment was not applicable in their case. ​ The Tribunal noted that the appellants had sold the bunkers at a price significantly lower than the import price, making it impossible for them to recover the customs duty paid. ​ Furthermore, the Chartered Accountant certificate provided by the appellants shifted the burden of proof to the department, which failed to produce any evidence to counter the claims. ​

    The Tribunal also emphasized that the department’s reliance on the premise that the duty was debited to expenses in the Profit and Loss Account was legally untenable. ​ Citing various judicial precedents, the Tribunal reiterated that such a debit does not imply that the incidence of duty was passed on to buyers, especially when the goods were sold below cost. ​

    In light of the overwhelming evidence and legal precedents, the Tribunal allowed the appeals and granted consequential relief to the appellants. ​

    Implications of the Judgment

    This decision is a significant victory for Dynamic Ship Recyclers Pvt. Ltd. and other appellants, as it sets a precedent for similar cases involving refund claims and the application of the unjust enrichment bar. The judgment underscores the importance of presenting robust evidence, such as sales data and Chartered Accountant certificates, to establish that the incidence of duty has not been passed on to buyers. ​

    Moreover, the ruling highlights the responsibility of the department to provide concrete evidence when challenging refund claims. ​ The Tribunal’s decision serves as a reminder that mere assumptions or procedural technicalities cannot override substantive evidence.

    Conclusion

    CESTAT Ahmedabad’s judgment in favor of Dynamic Ship Recyclers Pvt. Ltd. and other appellants is a testament to the importance of adhering to legal principles and ensuring justice in tax-related disputes. This case will undoubtedly serve as a guiding light for future cases involving similar issues, reinforcing the need for fairness and transparency in the adjudication process.

    Source: CESTAT Ahmedabad

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  • CESTAT Mumbai Orders Refund of SAD

    CESTAT Mumbai Orders Refund of SAD

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 10.05.2025

    CESTAT Mumbai Orders Refund of SAD

    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has ruled in favor of Varian Medical Systems International (India) Pvt. Ltd., ordering the refund of Special Additional Duty (SAD) amounting to β‚Ή2,87,801. The appeal arose after the refund was rejected by both the original authority and Commissioner (Appeals) on the ground that the duty was paid by DHL and not by the appellant.

    Case Summary

    • Appellant: Varian Medical Systems International (India) Pvt. Ltd.
    • Refund Claim: β‚Ή2,87,801/- for SAD under three Bills of Entry dated April–June 2017
    • Original Authority’s Rejection: Claimed refund was rejected on the ground that the SAD was paid by DHL
    • Ground for Appeal: TR-6 challans showed the appellant’s name as importer, proving they bore the duty burden

    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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  • CESTAT Bangalore Allows Refund to Nokia India

    CESTAT Bangalore Allows Refund to Nokia India

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 09.05.2025

    CESTAT Bangalore Allows Refund to Nokia India

    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore Bench has delivered a major win for M/s. Nokia India Sales Pvt. Ltd., allowing refunds of excess Countervailing Duty (CVD) paid on mobile phone imports and rejecting objections raised by Customs on the grounds of unjust enrichment and time-bar under Section 27 of the Customs Act.

    Case Snapshot

    • Importer: Nokia India Sales Pvt. Ltd., Gurgaon
    • Goods: Mobile phones under CTH 85171290
    • Period: October 2014 to June 2015
    • Refund Claims: Based on the Supreme Court ruling in SRF Ltd. v. Commissioner of Customs (2015) holding such imports eligible for concessional duty under Notification No. 12/2012-CE
    • Issue: Refunds rejected on grounds that:
      • Bills of Entry were not appealed
      • Burden of duty was allegedly passed on (unjust enrichment)
      • Certain claims were beyond the one-year statutory time limit

    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 Bangalore

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  • CESTAT Kolkata quashing a demand notice for recovery of a SAD refund

    CESTAT Kolkata quashing a demand notice for recovery of a SAD refund

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 30.04.2025

    CESTAT Kolkata quashing a demand notice for recovery of a SAD refund

    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, in Final Order No. 76020/2025 dated 24 April 2025, delivered a significant ruling in favour of KEC International Ltd., quashing a demand notice for recovery of a Special Additional Duty (SAD) refund.

    Background:

    • KEC International Ltd., a major manufacturer of power transmission equipment, had entered into an agreement with Power Grid Corporation of India Ltd. for setting up fibre optic cabling infrastructure.
    • In order to fulfil contractual obligations, KEC imported OPGW fibre optic cables and accessories and cleared the same for home consumption on 22 January 2014.
    • The company paid all applicable duties including SAD and subsequently sold the goods to Power Grid, discharging VAT/CST, and filed for a SAD refund under Notification No. 102/2007-Cus.
    • The refund claim was sanctioned on 26 September 2014 after due verification by Customs.

    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 Kolkata

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  • CESTAT Mumbai Orders Interest on Refund of Seized Traveller’s Cheques

    CESTAT Mumbai Orders Interest on Refund of Seized Traveller’s Cheques

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 25.04.2025

    CESTAT Mumbai Orders Interest on Refund of Seized Traveller’s Cheques

    The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench ruled in favor of M/s Sohail Maklai Entertainment Pvt. Ltd., directing the Customs Department to pay interest on the refund of β‚Ή47.86 lakhs, which was encashed from 106 traveller’s cheques seized back in 2006.

    Case Background:

    • On 19.10.2006, Customs officials at CSI Airport, Mumbai seized 106 traveller’s cheques from a passenger.
    • The cheques, amounting to USD $1,07,642 (equivalent to β‚Ή47,86,334), were deposited in the State Bank of India.
    • After prolonged litigation, redemption fine and penalties totaling β‚Ή10.01 lakhs were deducted.
    • The remaining β‚Ή41.85 lakhs was refunded, but no interest was paid on the retained amount.
    • The company sought interest on the refunded amount and alternatively, foreign exchange rate-adjusted compensation.

    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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  • CESTAT Mumbai No provision under Customs Act, 1962 empowers officers to collect interest in the absence of duty

    CESTAT Mumbai No provision under Customs Act, 1962 empowers officers to collect interest in the absence of duty

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 23.04.2025

    CESTAT Mumbai No provision under Customs Act, 1962 empowers officers to collect interest in the absence of duty

    The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench has allowed the appeal of M/s Lotus Herbals Color Cosmetics, ordering the refund of β‚Ή1,02,818, which was collected as interest without legal authority during EPCG import clearance.

    Case Overview:

    • The appellant imported a filling machine and parts under Bill of Entry No. 7362042 dated 27.03.2020 at JNPT, Nhava Sheva.
    • At the time of filing, they did not possess an EPCG authorisation, which was later issued on 03.06.2020.
    • Due to the COVID-19 lockdown, the EPCG licence was submitted after some delay.
    • Customs officers allegedly verbally demanded payment of interest for the intervening period.
    • The appellant paid β‚Ή1,02,818 as interest vide challan dated 25.06.2020, and the goods were cleared at nil customs duty under Notification No. 16/2015-Cus.

    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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