Delhi High Court Directs Re-assessment of Bills of Entry to Grant Infra Cess Refund

The petitioner, M/s JK (India) Fabs, imported electrically operated golf carts during March and September 2016. Under Notification No. 1/2016–Infrastructure Cess dated 1 March 2016, such electrically operated vehicles were exempt from payment of Infrastructure Cess. However, while filing the Bills of Entry on the EDI system, the petitioner was unable to claim the exemption due to a technical glitch. As a result, the petitioner paid excess customs duty, including Infra Cess, amounting to Rs. 55,876.29 over and above the actual duty payable.

Despite repeated representations seeking reassessment of the Bills of Entry and refund of excess duty, the Customs Department declined to process the refund on the ground that the Bills of Entry had attained finality and required reassessment or appellate intervention. Aggrieved by prolonged non-grant of a refund, the petitioner approached the Delhi High Court under Articles 226 and 227 of the Constitution.

Main Issue: Whether the Customs Department was justified in withholding the refund of excess Infrastructure Cess when the imported goods were admittedly exempt, and the exemption could not be claimed due to a technical glitch in the EDI system.

HC Decided: The Hon’ble High Court held that, in view of the Supreme Court’s ruling in ITC Ltd. v. CCE, refund of customs duty cannot be granted unless the assessment or self-assessment is modified through reassessment or appeal. However, the Court noted that the Department had not denied the petitioner’s assertion regarding the technical glitch in the EDI system.

The Court held that the benefit of the exemption could not be denied. The Court directed the Customs authorities to re-assess the relevant Bills of Entry within two months and, thereafter, grant a refund of the excess Infrastructure Cess paid by the petitioner. The writ petition was disposed of accordingly.

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