Maintainability of refund claim without challenging Assessment order

PJ/Case Laws/2010-11/1055

Case: M/s Bansal Alloys & Metals Pvt Ltd v/s Commissioner of Customs, Amritsar

Citation: 2009-TIOL-HC-P&H-CUS

Issue:- Refund claim maintainable without challenging assessment order, when there is no dispute regarding leviability of duty.

Brief Facts:- Appellant imported heavy melting scrap. They filed Six Bills of Entry for import of said goods before the Assistant Commissioner and was assessed to duty on the basis of respective invoices prior to physical examination. Appellant deposited duty accordingly. However, on physical examination and weighment by the Assessing Officer later on, the actual weight of the consignment was found short to the extent of 25% as compared to weight mentioned in the Bills of Entry.

Accordingly, appellant filed refund claims under Section 27 of the Act in respect of said Bills of Entry for the excess duty paid.

The Assistant Commissioner allowed the refund application of the appellant on the ground that the material received was less than shown in the Bills of Entry. It was also found that the refund claims were within time and no unjust enrichment was involved.

Revenue challenged the impugned order before the Commissioner (Appeals) on the ground that once the assessment order has been passed and the goods have been cleared out of the Customs charge, the only option available to the appellant-importer/assessee was to challenge the assessment order. It was further alleged that the Assistant Commissioner having passed the assessment order could not decide refund matter arising out of his own assessment order. The Commissioner (Appeals) allowed the appeal filed by Revenue holding that assessment orders having neither been challenged nor reviewed nor modified in appeal, the same had attained finality and further that the Assistant Commissioner himself could not decide the refund matter arising out of his own assessment order.

Aggrieved by the said order, appellant preferred appeals before the Tribunal. The Tribunal relying upon the decision of the Supreme Court in Collector of Central Excise, Kanpur vs. Flock (India) Pvt. Ltd. [2000 (120) ELT 285 (SC)]and Priya Blue Industries Ltd v/s Commissioner of Customs (Preventive) [2004 (172) ELT 145 (SC)]dismissed the appeals filed by the appellant. Hence, appellant is before the High Court in appeal.

Appellant’s Contentions:- Appellant submitted that in view of the scheme of the Act and provisions of Sections 17, 27 and 149 and admitted fact that the excess duty on the imported goods had been paid and collected, their claim for refund of excess duty cannot be declined on the basis that no challenge was made to the assessment order passed by the Assessing Officer which had attained finality or the Assessing Officer/Assistant Commissioner himself could not decide the refund matter.

It was submitted that it was incumbent upon the proper/Assessing Officer (Assistant Commissioner of Customs) in view of sub-section (4) of Section 17 to re-assess the duty payable on the basis of the examination report as the revenue could accept the payment only which had the authority of law. To support their argument reliance has been placed upon a recent Division Bench judgement of Bombay High Court rendered in Hero Cycles Ltd v/s The Union of India and others [2009-TIOL-317-HC-MUM-CUS].

Respondent’s Contentions:- Revenue submitted that in view of the assessment order having become final no claim for refund could have been entertained. Reliance was placed on the judgment given in Priya Blue and Flock (India)'s case.

Reasoning of the Judgment:- The High Court perused the provisions of Section 17, 27 and 149 of the Act and were of the considered opinion that the present appeal deserves to be allowed.

It is not disputed that after the deposit of duty, on physical examination of the goods by the Assistant Commissioner the weight of the imported goods was found less to the extent of 25% as compared to the weight given in the Bills of Entry.

The High Court observed that the relevant provisions provided that the appellant-importer/assessee was required to present to the proper officer a Bill of Entry for home consumption containing the particulars of goods being imported based on relevant documents. As per scheme of the Act provided under sub-section (2) of Section 17, after the submission of Bills of Entry by the appellant-importer under Section 46, the proper officer/Assistant Commissioner was required to examine the goods and assess the duty leviable. However, as per the provisions of sub-section (4) of Section 17 of the Act, prior to the examination of imported goods, the appellant-importer/assessee had the option to deposit the duty ascertained on the basis of statements made in the Bills of Entry and the documents produced along with it subject to re-assessment by the Assessing Officer after examination and testing of the goods. It is, thus, evident from the scheme of the Act that the duty can be paid only on account of the assessment by the Assessing Officer either on the basis of the statement in the Bill of Entry and on physical examination of the goods or on the basis of particulars of the goods in the Bill of Entry subject to re- assessment of duty under certain situation (when there is a discrepancy in duty leviable with regard to goods imported/ assessed between the Bill of Entry and examination report) before clearance of goods under section 47 of the Act. In any case, the duty leviable and collected is to be in accordance with law and on the goods factually imported.

It was observed that a bare perusal of clause (i) of sub-section (1) of Section 27 read with clause (b) of the Act revealed that any person before expiry of six months from the date of payment of duty, can claim refund of any excess duty and interest, if any, paid by him in pursuance of an order of assessment. It is further discernible from sub-section (2) of Section 27 of the Act that on receipt of such application, the Assistant Commissioner of Customs, after satisfying himself can make a proper order of refund and further direct the reimbursement to the applicant if the incidence of that duty has not been passed to any other person.

It is further discernible from proviso to Section 149 that after the goods imported have been cleared for home consumption, a Bill of Entry can only be amended on the basis of a documentary evidence which was in existence at the time the goods were cleared.

In the present case, it was noted that it is not disputed that the proper/assessing officer was Assistant Commissioner of Customs, who had assessed and collected the duty levied and had also found vide his examination report that the goods imported were less in weight than shown in the Bills of Entry. It is also not disputed that the appellant-importer/assessee had not passed on the burden of the duty to some other person and fulfilled all other conditions provided under section 27 of the Act. It is also not disputed that the application for refund was moved by the appellant-importer/assessee before the expiry of six months and before the Assistant Commissioner, who was also the proper/assessing officer.

The High Court perused the judgment given in Hero Cycles Ltd. v. The Union of India and others wherein on the facts of that case, the Division Bench by placing reliance on the judgement in the case of State of U.P. v. Mohammad Nooh [AIR 1958 SC 86]and reiterated in Champalal Binani v. Commissioner of Income Tax, West Bengal and others [76 ITR 692 (SC)] and had held that the fact that the petitioner has paid the duty under mistake of law and or in the instant case by oversight, cannot result in being assessed to duty which was otherwise not payable. In the opinion of the Division bench, this will be a case of manifest injustice and on the face of it erroneous.

The High Court held that in Flock (India)'s case the question involved was of disputed assessment involving an adjudication process of the nature envisaged under the rules and the Supreme Court had held that the claim for refund of the assessee could not be entertained in view of the assessment order not having been challenged despite being appealable. The Supreme Court in Priya Blue's case followed the view expressed in Flock (India)'s case although the refund claimed by the assessee was under the Customs Act, 1962. In Priya Blue's case the importer had paid the duty assessed under protest. Therefore, it was held that without assessment order having been modified in appeal or reviewed a claim for refund could not have been made.

The High Court was of the opinion that keeping in view the provisions of Section 17 which does not involve the process of adjudication as envisaged under the Excise Act read with rules under consideration in Flock (India)'s case, the ratio of the cited cases is not applicable to the facts of the present case as herein there is no dispute regarding the duty leviable. It is a case of improper exercise without the authority of law by the Assessing Officer/Assistant Commissioner. In the facts of the instant case, there being no dispute regarding duty leviable on examination of goods, it was the responsibility of the assessing/proper officer to re-assess (in view of provisions of sub-section (4) of Section 17) and correctly determine the duty leviable in accordance with law before clearing the goods for home consumption.

He having failed to do so, had caused great injustice to the appellant/importer and it was open for the appellant to file an application for refund under Section 27 of the Act without taking recourse to filing of an appeal. The competent authority under Section 27 of the Act, subject to fulfillment of the conditions laid therein, was fully competent to exercise its discretion and in view of provisions of Section 149 of the Act permit the amendment of Bill of Entry, on the basis of documentary evidence which was in existence at the time the goods were cleared, and order refund of excess duty paid and collected. It is apparent from the record that in the present case the proper officer/assessing officer who assessed the duty and was competent under Section 149 to permit the amendment in the Bill of Entry was the Assistant Commissioner of Customs, who is also the competent authority before whom the refund application is maintainable.

It is further apparent from the record that the application for refund, duly maintainable was made before the Assistant Commissioner who vide his order dated 31.12.2007 sanctioned the refund of excess duty. Therefore, it was held that the finding recorded by the Commissioner (Appeals) that the Assistant Commissioner was not competent to pass the refund order is not sustainable. The claim of refund of excess duty paid by the appellant-importer/assessee was maintainable and was rightly sanctioned by the competent authority.

Impugned orders passed in appeal by the Commissioner (Appeals) and the Tribunal are set aside. Refund claim of excess duty paid by the appellant is allowed.

Decision:- Appeal allowed.

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PJ/Case Laws/2010-11/1055

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