Karnataka HC directs Customs Authority to Refund Disputed Amount Import Duty in excess back to Importer pending disposal of Appeal [Read Order]

The Karnataka High Court directed the Customs Authority to refund Disputed Amount Import Duty in excess back to Importer pending disposal of the appeal.

In pursuant to the import of the goods, petitioner, FCI Oen Connectors filed his returns and requested the respondents for closure of the Bonds and sought return of the Bank guarantee furnished by him; the respondent issued a letter seeking clarification regarding eligibility of the petitioner to avail exemption and in response to the same, petitioner furnished the details vide letter submitted by him to the respondent. However, vide letter, respondent informed the petitioner that he had incorrectly claimed the benefit of exemption under the said Notification dated 09.04.2020 and therefore informed the petitioner that he was liable to pay customs duty in a sum of Rs.34,09,343/- availed by him as exemption. The petitioner responded to the said letter by submitting a letter dated 08.02.2021 along with all relevant details and documents. It is contended that pursuant thereto, respondent No.2 passed an erroneous and incorrect Order-in-Original No.4/2021 dated 10.03.2021 wrongly holding that the petitioner was liable to pay the aforesaid sum of Rs.34,09,343/-; under the said order, respondent No.2 directed recovery of the aforesaid sum by enforcing the continuity bonds and by encashing the Bank guarantee executed and furnished by the petitioner.

The petitioner submitted that though Section 128 of the Customs Act, 1962 provides for an appeal to be filed by the petitioner within a period of 60 days from the date of the Order-in-Original dated 10.03.2021, the respondents have illegally and high handedly proceeded to recover the aforesaid sum of Rs.34,09,343/- by encashing the bank guarantee on 11.03.2021 in a sum of Rs.5,25,000/- and invoking the continuity bonds executed by the petitioner for the balance of Rs.28,84,343/- without waiting for the statutory period of 60 days to expire within which the petitioner was entitled to prefer an appeal before the Appellate Authority.

The single bench of Justice S.R.Krishna Kumar held that the maximum liability to deposit the disputed amount in the appeal already preferred by the petitioner, which is pending adjudication is 7.5% of the disputed amount out of the total sum of Rs.34,09,343/- as directed in the Order-in-Original; it follows therefrom that in view of my finding that the impugned letters / orders are illegal and arbitrary and deserve to be quashed, by also applying the principles of restitution, it is necessary to direct the respondents to refund / repay any sum in excess of Rs.34,09,343/- back to the petitioner pending disposal of the appeal and by issuing necessary directions in this regard.

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