Limitation period for granting refund not applicable to refund of Custom duty paid in excess


The Hon’ble Customs, Excise & Services Tax Appellate Tribunal, Bangalore (“CESTAT”) in the matter of M/s FCI OEN Connectors v. Commissioner Of Central Tax & Central Excise, Cochin [Final Order No.20795/2021 dated October 21, 2021] held that when the customs duty is paid in excess, the department is liable to refund the same and the limitation provided under Section 27 of the Customs Act, 1962 (“the Customs Act”) will not be applicable.

M/s FCI OEN Connectors (“the Appellant”) filed the current appeal being aggrieved of the Order-in-Appeal passed by the Commissioner (Appeals), Kochi, whereby the Commissioner (Appeals) has upheld the rejection of refund claim under Section 11B of the Central Excise Act, 1944 (“the Central Excise Act”). Factually, It is the case of the Appellant that they have filed a refund claim of Rs.14,88,888/- being the Service tax paid on ocean freight for the period April 2017 to June 2017 but High Court of Gujarat in the case of SAL Steel Ltd. v. UOI [2019 (9) TMI 1315-Gujarat HC dated September 06, 2019] has clearly held that the levy in question was ulta vires Section 64, Section 66B and Section 65B(52) of the Finance Act, 1994 (“the Finance Act”) which decision was followed by the Gujarat High Court again in the case of Polycab India Limited Vs UOI [2020 (2) EMI 410- Gujarat HC dated January 30, 202]0 wherein, the High Court had held that the levy of service tax on ocean freight is unconstitutional.

The Hon’ble CESTAT after considering the rival contentions and after going through all the various decisions relied upon during the course of arguments clarified that it is a case where the Service tax has been held to be unconstitutional hence, the tax which is paid would amount to the one paid under mistake of law.

Further, the CESTAT relied upon the case M/s DHL Express India Pvt. Ltd. Vs Commissioner of Service Tax [2021-TIOL-1830-HC-KAR-CUS dated October 12, 2017] and held that when the customs duty is paid in excess, the department is liable to refund the same and the limitation provided under Section 27 of the Customs Act will not be applicable. Therefore, held that the lower authority has erred in law and fact, solely relying on Section 27 of the Customs Act while dismissing the application of the Appellant.

Hence, CESTAT do not find any justification in the reasons adopted for rejection of the refund claim by the lower authorities. Therefore, set aside the Order-in-Appeal and allowed the appeal.

Online GST Course by Bimal Jain

Recorded: Certified Advanced GST Course

Course Details: Certificate of Participation will be Provided, Free GST Updates on E-mail, WhatsApp, Telegram for 1 Year, Background Material and PPT will be Provided on the downloadable basis, Total 21 Recorded Sessions (60 Hours), will be available for 120 hours or 60 Days whichever expires earlier.

For Registration:-

Recorded: GST Course on Exports, Deemed Exports, SEZ, Imports, Merchandise Exports, Inverted Duty Structure (including Refunds)

Course Details: 6 Online Recorded Sessions of 2.30Hrs each with Background Material (BGM)

For Registration:-

For more details, Call: +91-8076563802, E-mail:, Web:

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.