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4 May 2016

Refund cannot be filed for the amount deposited under protest- if no appeal was filed earlier against the said demand

In the case of Vijal Marine Services v. Commissioner of Customs & Central Excise (2016) 68 taxmann.com 254 (Bombay), Hon’ble Bombay High Court has held that since no appeal was filed against said demand, assessee cannot claim refund of the partial payment made under protest.

In the said case the Assessee, a manufacturer, was carrying out manufacturing activity in customs bonded warehouse. Assistant Commissioner issued letters demanding Bonding costs/Merchant Overtime (MOT) fees. Subsequently, Assessee made partial payment under protest but, later, filed claim for refund of said amount.

Department denied refund on ground that since no appeal was filed against said demand, assessee cannot claim refund contrary to confirmed demand.

The High court of Bombay relying on the judgement of the Apex Court in the case of Collector of Central Excise v. Flock (India) (P.) Ltd. 2000 taxmann.com 701, held the following:

  1. A decision or Order passed under Act can be challenged before Commissioner (Appeals)

  2. Since the demand confirmed by Assistant Commissioner was not challenged in appeal, hence, demand continued to be in force.

  3. As no Appeal has been preferred against such adjudication, the question of filing an application for refund of the amount would not arise at all.

In the case of Flock India (as stated supra), the Supreme Court held that if an order which is appealable under the Act is not challenged then the order is not liable to be questioned and the matter is not to be reopened in a proceeding for refund which, if we may term it so, is in the nature of execution of a decree/order.