Delay By Authority In Sanctioning Refund Claim Is 'Sufficient Cause' For Excluding Limitation: CESTAT Chennai

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that delay by the refund authority in sanctioning a refund claim is 'sufficient cause' for excluding limitation under Section 14 of the Limitation Act. Section 14 of the Limitation Act, 1963, allows for the exclusion of time spent in good faith in a previous civil proceeding from the calculation of the limitation period for a subsequent suit or application. Vasa Seshagiri Rao (Technical Member) stated that ……The practical incapacity of the Refund-Sanctioning Officer to render an effective, reasoned decision within a reasonable time rendered that remedy ineffectual for timely redress. The prolonged inaction on the part of the Department constitutes a “sufficient cause” for excluding the period under Section 14 of the Limitation Act, 1963. In this case, the assessee/appellants are regularly importing “Spreaders RSX40" from Malaysia, classifiable under CTH 84289090. The said goods are exempted from the payment of basic Customs duty under S. No. 696 of Notification No.53/2011-Customs dated 01.07.2011. As the assessees were not in possession of a Certificate of Origin (COO) at the time of filing the bills of entry, they cleared the goods by paying the merit rate of duty. Subsequently, on receipt of the said COO, the assessees requested the Dy. Commissioner of Customs (Refunds) vide their letter dated 02.05.2018, to grant a refund. The Dy. Commissioner of Customs informed the assessees in response to the CP Grams sent by them, stating that no re-assessment shall be allowed unless the order of assessment, including self-assessment, is duly modified by way of appeal. Aggrieved, the assessee filed Appeals before the Commissioner of Customs (Appeals II), Chennai, which were rejected. The assessee argued that the rejection of the refund claim by the Original Authority after nearly two years, citing the ITC Decision, is arbitrary. No basic Customs Duty is payable on the imported goods as the assessee is eligible for exemption under Notification No. 53/2011-Cus dated 01.07.2011. The issue before the bench was whether the time spent by the assessee pursuing a refund claim before the Refund-Sanctioning Officer can be excluded for the purpose of limitation for filing the statutory appeal before the Commissioner (Appeals). The bench noted that the assessee had to resort to CPGRAMS to get this belated reply from the Department. The delay in processing the assessee's request in time is highly contrary to the service delivery obligations under the Citizen Charter / SEVOTTAM. Such unexplained administrative inaction has led to a consequence where the assessee has been placed in a disadvantageous position without any fault on its part, warranting exclusion of such time for the purpose of computing limitation. Consequent upon the exclusion of the said two-year period, the appeal filed by the appellant before the Commissioner (Appeals) is to be treated as within time, and the impugned order holding the appeals to be time-barred is hereby set aside to the extent it relates to delayed/time barred Appeals, held the Tribunal. The bench directed the department to treat the appeals as filed within time by excluding the period of approximately two years spent by the assessee pursuing the refund application before the Refund-Sanctioning Authority. In view of the above, the Tribunal allowed the appeal and remanded the matter to the Commissioner (Appeals) for fresh consideration. Case Title: M/s. Kalmar India Private Limited v. Commissioner of Customs Case Number: Customs Appeal Nos. 40368 to 40370 of 2021 Counsel for Appellant/ Assessee: Bharat Raichandani Counsel for Respondent/ Department: O.M. Reena Click Here To Read/Download Order

Delay By Authority In Sanctioning Refund Claim Is 'Sufficient Cause' For Excluding Limitation: CESTAT Chennai

Mehak Dhiman

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