𝐒 𝐉 𝐄𝐗𝐈𝐌 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 26.02.2025

CESTAT Mumbai Confirmed that double payment due to a technical glitch is refundable

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has ruled in favor of Varian Medical Systems International (India) Pvt. Ltd., allowing a refund of ₹10,25,253 for customs duty mistakenly paid twice due to a technical glitch. The Tribunal overturned the Commissioner of Customs (Appeals)’ order, emphasizing that the excess payment had no legal basis and must be refunded. This case reaffirms the principle that unintentional double payments should not be retained by the revenue authorities.

1. Case Overview

• The appellant, Varian Medical Systems International (India) Pvt. Ltd., imported life-saving medical equipment and its parts via courier mode.
• A technical glitch in the customs software resulted in double payment of customs duty on March 21, 2018.
• The company sought a refund of ₹10,25,253, which was initially approved but later rejected by the Commissioner of Customs (Appeals).

2. Arguments by the Appellant (Varian Medical Systems)

• The customs duty was paid twice by mistake due to an error in the EDI system.
• The company had employed a customs broker (Pacific Customs Broker Services Pvt. Ltd.), who processed the duty payments.
• Under Section 27 of the Customs Act, 1962, the refund should be allowed as there was no legal basis for the second payment.
• Submitted a chartered accountant’s certificate confirming that the excess duty had not been passed on to any third party, ensuring compliance with the “no unjust enrichment” principle.

3. Arguments by the Respondent (Commissioner of Customs)

• Claimed that the appellant did not provide documentary proof that it bore the duty burden.
• Argued that the customs broker made the payment, and refund could not be granted without direct evidence linking the payment to the importer.
• Maintained that the impugned order was legally valid and the refund claim should be rejected.

4. Tribunal’s Observations

• Confirmed that the customs duty was paid twice, based on official records and verification from the State Bank of India.
• Cited Section 27 of the Customs Act, 1962, which allows refunds for excess duty payments, irrespective of whether the payment was made directly by the importer or through a broker.
• Referred to previous judicial rulings, including:
  • Swastik Sanitarywares Ltd. vs. Union of India – Gujarat High Court ruling supporting the refund of mistakenly paid duty.
  • Star Textile Engg. Works Ltd. vs. Collector of Customs – A precedent establishing that double duty payments should be refunded.
• Emphasized that the customs broker acted as an agent of the importer and that the refund should be granted to the appellant.

5. Final Judgment

• The CESTAT set aside the Commissioner of Customs (Appeals)’ decision.
• Ordered a refund of ₹10,25,253 to Varian Medical Systems.
• Confirmed that double payment due to a technical glitch is refundable, even if made through a customs broker.

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Source: CESTAT Mumbai

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