CESTAT Chennai Upholds JSW Steel's Export Duty Refund of Rs. 1,61,96,066: Reassessment Determines Limitation Clock

Background and Case Overview

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, rendered a significant ruling in JSW Steel Ltd. Vs Commissioner of Customs (CESTAT Chennai), deciding two interconnected appeals — Customs Appeal No. 41996 of 2016 and Customs Appeal No. 41997 of 2016 — through a common order dated 04/09/2026. The principal question before the Tribunal was whether JSW Steel Limited's claim for refund of excess export duty amounting to Rs. 1,61,96,066/- was barred by limitation under Section 27 of the Customs Act, 1962, and whether interest was payable on the sanctioned refund amount.

Both appeals arose from a common impugned order passed by the Commissioner of Customs (Appeals-II) bearing Appeal C.Cus II No. 761 & 762/2016 dated 11.08.2016. The Tribunal ultimately ruled in favour of the assessee, restoring the refund order and directing payment of interest from 22.12.2015.

Factual Matrix

JSW Steel Limited had exported "Non Alloy Steel Slabs Export Prime Steel" classified under ITC HS 72071290 through four shipping bills:

  • Shipping Bill No. 3066930 dated 25.06.2008
  • Shipping Bill No. 3069912 dated 27.06.2008
  • Shipping Bill No. 3080903 dated 08.07.2008
  • Shipping Bill No. 3084299 dated 11.07.2008

Export duty was leviable at 15% ad valorem under Notification No. 66/2008-Cus dated 10.05.2008. JSW paid export duty at 15% of the FOB price of the exported steel products. Notably, no export duty was separately assessed on the shipping bills at the time of export.

Subsequently, CBEC Circular No. 18/2008-Cus dated 10.11.2008 clarified that until 31.12.2008, the existing practice of computing export duty by treating the FOB price as the cum-duty price could be continued, and that from 01.01.2009 onwards, the transaction value as defined under Section 14 of the Customs Act, 1962 would serve as the base for computing export duty.

Upon reading this Circular, JSW concluded that it had paid excess export duty and filed a refund application dated 30.01.2009 for Rs. 1,61,96,066/-, representing the difference between the duty actually paid and the correct duty liability computed on a cum-duty basis.

Procedural History

The refund journey passed through multiple rounds of litigation:

  1. The original refund application was rejected as time-barred vide Order-in-Original No. 9927/2009 dated 05.11.2009.
  2. On appeal, the Commissioner (Appeals) allowed the refund vide OIA C.Cus No. 387/2010 dated 03.05.2010, holding that Section 27 of the Customs Act, 1962 was not applicable and therefore the question of limitation did not arise.
  3. Revenue appealed to the Tribunal, which through Final Order No. 40250/2014 dated 19.03.2014 remanded the matter back to the original authority, keeping all issues open.
  4. Upon remand, the Assistant Commissioner sanctioned the refund of Rs. 1,61,96,066/- through Order-in-Original No. 44746/2016, finding that the Customs Export Department's Note dated 21.09.2015 amounted to reassessment and triggered the limitation period afresh.
  5. Revenue again appealed, and the Commissioner (Appeals) reversed the refund order, holding the claim time-barred. JSW simultaneously appealed against denial of interest.

Both appeals then reached CESTAT Chennai, giving rise to the present order.

Arguments Advanced by JSW Steel (Assessee)

The assessee's counsel raised four distinct grounds:

Ground A: Limitation Runs from Date of Reassessment

The refund claim under Section 27, as it stood during the relevant period, is triggered only when an amount is paid pursuant to an order of assessment. Since the subject shipping bills did not record any assessed export duty, and the excess payment appeared nowhere in the Let Export Orders or contemporaneous records, the cause of action could not have arisen before the Note dated 21.09.2015.

The assessee placed reliance on:

  • Commissioner of Cus. (Import) v. Indian Farmers Fertiliser Co-Op. Ltd., 2009 (243) E.L.T. 687 (Bom.)
  • Keshari Steels v. Collector of Customs, Bombay, 2000 (115) E.L.T. 320 (Bom.), affirmed 2000 (121) E.L.T. A139 (S.C.)
  • Principal Commissioner of Customs, New Delhi v. Lava International Ltd., 2023 (3) TMI 25-CESTAT New Delhi

Ground B: Without Prejudice — Limitation Runs from Discovery of Mistake