The Delhi High Court has held that limitation for claiming refund under Customs Act, 1962 is inapplicable on Extra Duty Deposit (EDD).
The bench of Justice Prathiba M. Singh and Justice Dharmesh Sharma have observed that Section 27 of the Customs Act deals with refund of customs duty. It is abundantly clear that EDD is not in the nature of customs duty. The deposit of the EDD was itself to secure any customs duty which may have been later on found to be payable, due to the allegation of under- declaration. However, when the said allegation has been disproved and the Department has taken a view that there was no under-declaration, the substratum of the deposit of EDD itself no longer exists.
The Petitioner, Sentec India Company Private Limited has filed the sought refund of Rs.10,72,986/- which was deposited with the Customs Department as Extra Duty Deposit.
The Petitioner had imported certain goods from Taiwan between 2014 and 2017. The Respondent/Department had suspected undervaluation of said goods and referred the same to the Special Valuation Branch, Delhi (SVB).
While those proceedings were pending, the goods in question were cleared on a provisional assessment basis on payment of EDD of 1% or 5% in terms of Circular 05/2016-Customs dated 9th February, 2016 read with Circular No. 11/2001-Customs dated 23rd February, 2001 and Circular No. 1/1998-Customs dated 01st January, 1998.
According to the Petitioner, it had deposited Rs.10,72,986 in the form of EDD at that stage to facilitate the release of the goods.
SVB had commenced an investigation in respect of the said imports based on the allegation that the exporter (‘Sentec E & E Co. Ltd, Taiwan) and Importer (Petitioner) were related, and the relationship could have resulted in the undervaluation of the goods imported.
The Respondent-Department conducted the final assessment of the bills of entry on 15th November 2019, accepting the valuation submitted by the Petitioner. This, according to the Petitioner, had entitled them to claim the refund of EDD deposited post the provisional assessment.
The Petitioner repeatedly sought a refund of the EDD that was deposited. However, the Respondent-Department refused the claim vide impugned Order-in-Original on the ground that the first claim for refund was received by the Department only on 18th August, 2020, and the same was beyond the one-year limitation period prescribed under Section 27 of the Customs Act, 1962.
The petitioner contended that Circular 05/2016-Customs dated 9th February, 2016 expressly clarifies that EDD is not a form of customs duty and the same is paid to the Customs Authority in the form of a security deposit. Once the final assessment is done, the amount cannot be withheld by the Customs Department.
The court held that the order holding that the refund application is beyond the limitation is, thus, untenable. Moreover, the order itself acknowledges that the amount is over and above the duty which was determined by the SVB. The Customs Department could not have rejected the prayer for EDD refund.
Case Details
Case Title: Sentec India Company Private Limited Versus Assistant Commissioner Of Customs
Case No.: W.P.(C) 868/2025
Date: 18/02/2025
Counsel For Appellant: Abhishek Garg
Counsel For Petitioner: Atul Tripathi
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