CESTAT Chennai Rules, Delay By Authority In Sanctioning Refund Claim Is 'Sufficient Cause' For Excluding Limitation
Sangeetha Prathap
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, comprising Mr. Vasa Seshagiri Rao, Member (Technical), has held that delay caused by the refund-sanctioning authority while processing a refund request constitutes “sufficient cause” for excluding limitation under Section 14 of the Limitation Act, 1963. The Tribunal concluded that when a party has diligently pursued a remedy before an authority that is practically incapable of providing relief within a reasonable time, such period cannot be counted while calculating limitation for filing an appeal.
The case concerned M/s. Kalmar India Private Limited (formerly Cargotec India Pvt. Ltd.), regular importers of “Spreaders RSX40” from Malaysia classified under CTH 84289090. These goods are eligible for exemption from Basic Customs Duty under Sl. No. 696 of Notification No. 53/2011-Customs dated 01.07.2011 when supported by a Certificate of Origin (COO). Since the COO was not available at the time of import, the consignments were cleared by paying duty at merit rate. Once the COO was received, the appellant approached the Deputy Commissioner of Customs (Refunds) on 02.05.2018 requesting reassessment and refund of duty.
The record showed that the appellant continued to follow up the refund request including through CPGRAMS reminders, but the refund officer informed them only on 06.02.2020 — after nearly two years — that reassessment could be pursued only by filing an appeal before the Commissioner (Appeals). On approaching the Commissioner (Appeals), the assessee’s appeals were dismissed as time-barred, holding that the deadline prescribed under Section 128(1) of the Customs Act had expired. The Commissioner also observed that duty was not paid under protest and therefore declined to examine the claim on merits.
Before the Tribunal, the appellants argued that the dismissal of their appeals as time-barred was unjustified because the delay was not attributable to them. They contended that the department’s failure to respond to their refund request for almost two years prevented them from filing an appeal within limitation. They also pointed out that the Supreme Court’s decision in ITC Ltd. v. Commissioner of Central Excise and the consequential Public Notice relied upon by the department did not exist at the time when the refund claim was filed and therefore could not have been anticipated. The appellants further invoked Section 14 of the Limitation Act, asserting that the period spent bona fide pursuing the refund remedy before the wrong forum must be excluded.
The Tribunal noted that the reply from the department came only after the appellant resorted to CPGRAMS and that the department’s inaction was in “highly contrary” terms to the Citizen Charter and SEVOTTAM service obligations. It referred to the refund letter dated 02.05.2018 and subsequent reminders to conclude that the appellant had diligently pursued the matter. The Tribunal observed 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”, and that such prolonged delay constituted “sufficient cause” for exclusion under Section 14 of the Limitation Act, 1963.
The Tribunal also recorded that the Commissioner (Appeals) failed to consider the submissions on limitation and the applicability of Section 14, making the impugned order cryptic and non-speaking. It held that the order suffered from legal infirmity for failing to address core arguments and for mechanically treating the appeals as time-barred.
Consequently, the CESTAT Chennai set aside the finding of delay and directed that the appeals filed before the Commissioner (Appeals) be treated as filed within time by excluding the two-year period spent before the refund authority. The Tribunal remanded the matter for fresh adjudication on all issues including verification of the Certificates of Origin, applicability of Notification No. 53/2011-Cus, and eligibility for duty exemption, with a further direction to provide the appellant an opportunity of personal hearing and permit submission of additional documents.
In conclusion, the Tribunal allowed the appeals by way of remand, directing the Commissioner (Appeals) to examine the merits of the refund claim rather than treating the appeals as time-barred.
Appearance
Counsel for Appellant/ Assessee: Bharat Raichandani
Counsel for Respondent/ Department: O.M. Reena
Cause Title: M/s. Kalmar India Private Limited v. Commissioner of Customs
Case No: Customs Appeal Nos. 40368 to 40370 of 2021
Coram: Mr. Vasa Seshagiri Rao, Member (Technical)
