Oswal Industries Limited Vs Commissioner of Customs (Import) (CESTAT Mumbai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, decided the appeal filed by Oswal Industries Limited against the Commissioner of Customs (Import), Mumbai Zone-I concerning the encashment of a bank guarantee during the pendency of an appeal and the subsequent rejection of refund on the ground of limitation under Section 27 of the Customs Act, 1962.
The dispute centered on whether a bank guarantee encashed by the department during the pendency of appeal could be treated as “payment of duty” so as to attract the limitation period under Section 27 of the Customs Act, 1962.
The appellant had imported goods under three Bills of Entry dated 21 August 2003. Due to disputes raised by the customs department, the goods were provisionally released on 12 January 2004 against execution of a bond and a bank guarantee of ₹10 lakh. A show cause notice proposing demand of ₹10,27,823 in customs duty culminated in an Order-in-Original dated 9 June 2006 confirming the demand. The appellant challenged this order before the Tribunal.
During the pendency of the appeal, the department encashed the bank guarantee and deposited the amount into the government treasury on 6 February 2007. Subsequently, the Tribunal decided the appeal in favour of the appellant on 8 November 2016, setting aside the order confirming the demand.
