FALCON TYRES LTD. Vs. COMMISSIONER OF CUSTOMS, CHENNAI

JUDGEMENT

(1.) THIS appeal arises from the Order -in -Appeal C. Cus No. 616/2003, dated 31 -10 -2003 by which the Commissioner (Appeals) has rejected the refund claim as time bar. The appellants had furnished Bank Guarantee against advance license No. 0032871. The same was enforced in 18 -7 -2000. The claim was filed on 20 -12 -2001. Both the authorities have taken the view that the refund is not maintainable as it is barred by time in terms of Section 27(i)(b) of the Customs Act, 1962. The appellants contention is that in the present case, the Bank Guarantee furnished was only as a security and therefore, the Bank Guarantee was not required to have been appropriated. The provisions of Section 27 of the Customs Act is not applicable and therefore, in terms of a large number of judgments of the Tribunal, the High Courts and the Supreme Court, the amount was required to have been refunded. The learned Counsel files list of authorities which are noted below : -

(2.) THE learned SDR opposes the prayer and submits that both the authorities have relied on the citations and found that the Bank Guarantee was to be encashed towards the duty and therefore the provisions of Section 27 of the Customs Act, 1962 is attracted. Hence all the citations relied by the learned Counsel are clearly distinguishable. The learned SDR refers to the judgment of the Tribunal rendered in the case of CC, Chennai v. Bharat Heavy Electricals Ltd. - [2002 (144) E.L.T. 125 (Tri. - Chennai)] and submits that in similar circumstances, the Tribunal has upheld the Revenues plea as time bar.

(3.) ON a careful consideration of the submissions made by both the sides, I notice that all the judgments relied by the learned Counsel clearly applies to the facts of the present case. In the case of Lucas TVS Ltd. v. CC, Chennai (supra), the Bank Guarantee had been encashed by the Department and refund claim had been filed after six months. The Tribunal has taken a view, in the light of several judgments, that Section 27 of the Customs Act and Section 11B of the Central Excise Act are not attracted. The facts and circumstances and the ratio narrated in the judgment clearly applies to the facts of the present case. This Bench in the case of Motorola India Pvt Ltd. v. CCE, Bangalore -III (supra) has also held that when amounts are deposited during the proceedings, they are to be treated as deposit and not duty and the question of limitation does not arise. The same view has been expressed in the case of Grasim Industries Ltd. (supra). The assessee had given Bank Guarantee as a security to the Revenue towards differential duty and the same had been enchased and the refund claim was rejected as time bar. The Tribunal following the Apex Court judgment in the case of Oswal Agro Mills Ltd. [1994 (70) E.L.T. 48 (S.C.)] has held that the Bank Guarantee had been given as a security and not towards the duty and therefore refund was required to have been made in the case without applicability of time bar. In the case of Saheli Synthetics Pvt. Ltd. (supra), the Revenue had encashed Bank Guarantee and rejected the refund claim on unjust enrichment. The Tribunal has followed the case -law noted in the Grasim Industries Ltd. and held that the Bank Guarantee is only a security and cannot be held as payment of duty and refund should be made without applicability of time bar. Similar view has been expressed by the Tribunal in the cases of Goodyear India (supra); Pace Marketing Specialities (supra); Aeronautical Development Agency (supra). The Delhi High Court in the case of CC v. CEGAT [2005 (179) E.L.T. 394 (Del.)] has also laid down the same ratio that Bank Guarantee furnished is only a security and it cannot be considered as payment towards the duty. The High Court has referred to the Bombay High Court judgment rendered in the case of Mahindra and Mahindra Ltd. v. Union of India [1992 (59) E.L.T. 505 (Bom)] and the Apex Court judgment rendered in the case of Oswal Agro Mills Ltd. (supra). In view of these judgments, the reliance placed by the Commissioner (Appeals) in the case of CC, Chennai v. Bharat Heavy Electricals Ltd. (supra) is not proper. The issue in Bharat Heavy Electricals Ltd. case is not pertaining to furnishing of Bank Guarantee and therefore this judgment is clearly distinguishable with the facts of the present case. In view of the plethora of judgments noted supra, the claim of refund of amount appropriated towards the Bank Guarantee is required to be refunded to the assessee with interest within a period of three months from the date of receipt of this order. The appeal is allowed.