Customs wrongly encashed bank guarantee during appeal pendency: CESTAT directs refund, rejects limitation claim

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that when a bank guarantee is encashed by revenue during the pendency of an appeal, that encashment does not equate to “payment of duty” under the Customs Act, 1962 and thus the limitation period under Section 27 does not automatically bar refund. The tribunal directed refund of the amount and rejected the limitation defence. The decision reinforces the doctrine against unjust enrichment when the government retains amounts not legally due.