Karnataka HC orders Customs Authority to refund disputed amount of excess import duty to importer pending appeal decision

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Karnataka High Court - Customs Authority - refund of disputed amount of import duty - Importer pending disposal - appeal - Taxscan

The Karnataka High Court ordered the customs authority to refund the disputed excess import duty to the importer pending the settlement of the appeal.

In accordance with the importation of the goods, the plaintiff, FCI Oen Connectors, filed his declarations and asked the defendants for the closing of the obligations and requested the return of the bank guarantee provided by him; The Respondent sent a letter requesting clarification regarding the Applicant’s eligibility for the exemption and in response, the Applicant provided details of the letter he submitted to the Respondent. However, in an empty letter, the Respondent informed the Claimant that he had wrongly requested the benefit of the exemption under the said notification of 09.04.2020 and therefore informed the Claimant that he was liable to pay duties customs duty in the amount of Rs.34,09,343/- which he avails himself of as an exemption. The petitioner replied to the said letter by submitting a letter dated 08.02.2021 together with all relevant details and documents. It is argued that as a result, Respondent No. 2 passed an erroneous and incorrect order in original No. 4/2021 dated 10.03.2021 wrongly stating that the Claimant was liable to pay the aforementioned sum of Rs.34 .09.343/-; under the said order, respondent no. 2 ordered the recovery of the said sum by executing the continuity bonds and cashing the bank guarantee signed and provided by the applicant.

The claimant argued that although section 128 of the Customs Act 1962 provides that an appeal must be filed by the claimant within 60 days of the date of the original order of 10.03.2021 , the defendants unlawfully and proceeded to recover the aforementioned sum of Rs.34,09,343/- by cashing the bank guarantee on 11.03.2021 in the sum of Rs.5,25,000/- and invoking the obligations of continuity executed by the applicant for the balance of Rs. 28,84,343/- without waiting for the expiration of the legal period of 60 days within which the applicant had the right to present an appeal before the Appeals Authority.

The Single Bench of Judge SRKrishna Kumar ruled that the maximum liability to deposit the disputed amount in the appeal already preferred by the petitioner, which is awaiting judgment, is 7.5% of the disputed amount out of the total sum of Rs .34,09,343/- as stated in original order; it follows that in view of my conclusion that the disputed letters/orders are unlawful and arbitrary and merit rescission, also applying the principles of restitution, it is necessary to order the respondents to repay/reimburse all sums exceeding Rs .34,09,343/- return to the petitioner pending the decision on the appeal and issuing the necessary instructions in this regard.

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