refund of excess paid cvd is admissible or not?

PJ/CASE LAW/2014-15/2502

Case:-Cipla Ltd Vs Commissioner Of Customs (Acc & Import), Mumbai

Citation:-2015-TIOL-201-CESTAT-MUM

Brief facts:-the appeal is directed against order-in-appeal no. 465/mumbai-iii/2012 dated 21/11/2012 passed by commissioner of customs (appeals), mumbai, by which the commissioner has upheld the order-in-original.
The fact of the case is that the appellant filed a bill of entry no. 490634 dated 31/03/2010 for import of fermoterol fumarate for home consumption. The appellant paid excess cvd @ 10% instead of effective rate of 4% in terms of unconditional exemption notification no. 4/2006-ce dated 01/03/2006 (sl. No. 62c. The appellant filed a refund application for an amount of rs.1,33,779/- towards the excess paid duty which was rejected by the assistant commissioner of customs on the ground that the appellant has not challenged the assessment of bill of entry, following the ration of the judgement in the case of cce vs. Flock india – 2000 (120) elt 285 (sc) = 2002-tiol-208-sc-cx and priya blue industries ltd – 2004 (192) elt 145 (sc) = 2004-tiol-78-sc-cus. In an appeal against the said order-in-original, the commissioner (appeals) upheld the order-in-original. Thus, the appellant is before them.

Appellant’s contention:-ms. Srinidhi ganeshan, the learned counsel for the appellant submits that there is no dispute as regards the admissible rate of cvd that is 4% by either side. The appellant has paid 10% cvd due to oversight. The notification prescribing 4% cvd is unconditional. Therefore, there is no dispute as regards the applicability of 4% cvd between the appellant and the department. Under this fact, it is not a case where the assessment is required to be challenged in order to claim the refund of excess paid duty. As regards the revenue's reliance of flock india and priya blue industries case (cited supra), she placed reliance on the decision of hon'ble high court of delhi in the case of aman medical products ltd. Vs. Cc, delhi - 2010 (250) elt 30 (del) = 2009-tiol-566-hc-del-cus wherein both the said hon'ble apex court judgements have been distinguished. The learned counsel submits that the facts of the aman medical prdoucts ltd. Case is absolutely identical to the facts of the present case. She has also relied on judgements in the case of bennet coleman & co. Ltd. Vs. Cc bangalore – 2008 (232) elt 367 (tri-bang) = 2008-tiol-1341-cestat-bang wherein the issue involved was the assessee had not claimed the exemption notification no. 20/2006-cus and paid higher duty and subsequently claimed the refund, the revenue had rejected the claim on the ground of non challenging the assessment order. The tribunal held that since unconditional exemption notification was not disputed there was no need to challenge the assessment. Rather exemption notification could have been extended by the departmental officers itself. The tribunal also held that this is rectifiable omission under section 154 of the customs act. She also placed reliance on the decision in the case of sesa goa ltd. Vc.Cce, goa – 2010-tiol-1729-cesta t-mum.

Respondent’s contention:-on the other hand, the deputy commissioner (ar) appearing for the revenue reiterates the findings of the commissioner (appeals). He also submits that the judgement of aman medical products ltd. Has been challenged by the revenue before the hon'ble supreme court which is pending, therefore, the issue has not attained finality.

Reasoning of judgment:-in the present case, there is no dispute that at the material time of import the effective rate of cvd was 4% by notification no. 4/2006-ce and the appellant has paid excess duty of 10% by oversight. Even though the revenue has not disputed that the effective rate of duty was 4%, this fact clearly established that there is no dispute between the appellant and the revenue as regards the effective rate of cvd. The lower appellate authority has rejected the claim, applying the ratio of flock india and priya blue industries case (cited supra). However, both these apex court judgements have been distinguished in aman medical products ltd. Case by hon'ble high court of delhi. The relevant operative part of the judgement is reproduced below:

"if therefore we refer to language of section 27, it is more than clear that the duty which is paid is not necessarily pursuant to an order of assessment but can also be borne by him?. Clause (i) and (ii) of sub-section (1) of section 27 are clearly in the alternative as the expression or? Is found in between clauses (i) and (ii). The object of section 27(i)(ii) is to cover those classes of case where the duty is paid by a person without an order of assessment, i.e. In a case like the present where the assessee pays the duty in ignorance of a notification which allows him payment of concessional rate of duty merely after filing a bill of entry. In fact, such a case is the present case in which there is no assessment order for being challenged in the appeal which is passed under section 27(1)(i) of the act because there is no contest or lis and hence no adversarial assessment order.
5. The tribunal has referred to the cases of cce, kanpur vs. Flock (india) pvt. Ltd. [2000(120) elt 285] = 2002-tiol-208-sc-cx and priya blue industries ltd. Vs. Commissioner of customs (preventive) 2004 (172) elt 145 (sc) = 2004-tiol-78-sccus. In both these cases, referred to by the tribunal there was an assessment order which was passed and consequently it was held that where an adjudicating authority passed an order which is appealable and the party did not chose to exercise the statutory right of appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that adjudicating authority had committed an error in passing his order. These judgments will therefore not apply when there is no assessment order on dispute/contest, like as is in the facts of the present case.
6. We, therefore, answer the question framed by holding that the refund claim of the appellant was maintainable under section 27 of the customs act and the non-filing of the appeal against the assessed bill of entry does not deprive the appellant to file its claim for refund under section 27 of the customs act, 1962 and which claim will fall under clause (ii) of sub section (1) of section 27.
7. We accordingly set aside the impugned order dated 3.4.2008 of the cestat and uphold the order of the commissioner of customs appeal dated 28.1.2005 and remand of the matter to the original authority viz deputy commissioner of customs (refund) to examine the merits of the matter in accordance with law after providing due opportunity to the appellant.

From the above judgement of the hon'ble delhi high court, it is settled that where the duty was taken mistakenly. There is no dispute that the duty was paid in excess to what was required to pay. There is no need to challenge the assessment of the bill of entry. The refund of excess paid duty is admissible. In the above judgement also the facts of case are identical. In another case of bennet coleman & co. Ltd., - 2008 (232) elt 367 (tri-bang) held as under:

"7. We have gone through the records of the case carefully. The appellants imported newsprint and filed the bills of entry. The assessment is carried out by the assessing officer. When the goods are subjected to customs duty, it is the responsibility of the assessing officer to correctly assess the goods to duty. The importer, in the bill of entry, furnishes the description of the goods. He also submits documents like invoice, packing list, technical literature, bill of lading etc. So that correct assessment is carried out. Generally, assessment involves classification of the goods, valuation and applying the correct rate of duty taking into account the exemption notifications. The import of the goods with regard to the import-export policy is also to be examined. The word ‘assessment' includes all the above. As regards the rate of duty, the tariff schedule against the description of the goods mentions the rate of duty. However, in certain cases, the goods are unconditionally exempted by virtue of certain exemption notifications. In other cases, the exemption from duty, either partial or complete is dependent on certain conditions. For example, in certain cases, the importer is expected to furnish certificates from competent authorities. It should be borne in mind that assessment to customs duty is a highly technical job and only an officer, who is fully acquainted with the legal provisions and procedures, can competently complete the assessment without loss of revenue or depriving the importer of any benefit intended by an exemption notification.
7.1. In this case, it is not in dispute that the impugned goods are unconditionally exempt from the additional duty (imports) by virtue of notification no.20/2006 dated 01.03.2006. The appellants have stated that they had banked upon the expertise of the custom house agent and also the assessing officers. Consequent to the assessment, they paid duty to the tune of rs.21,61,129/-. This is a huge sum. The notification is unconditional. Is it not incumbent on the part of the assessing officer to take into account the said notification? Obviously, in the present case, there is negligence on the part of the assessing officer. We cannot say that the assessing officer applied his mind to the facts and consciously took a decision to levy additional duty. This is a case of sheer omission on the part of the assessing officer.
7.2. In the final order no.1413 to 1416/2007 dated 12.12.2007 quoted by the revenue, the importer was supposed to file a certificate for claiming the exemption at the time of import. He failed to file the certificate. The assessment was completed. Later, the certificate was obtained and the said importer claimed refund. In that case, this bench, followed the decision of the larger bench in the case of eurotex. Therefore, the facts of that case decided by this bench are distinguishable from those of the present case.
7.3. The hon'ble apex court, in the case of shree hari chemicals vs. Uoi & anr. – 2006 (193) elt 257 (sc) = 2005-tiol-160-sc-cx, had observed that there was an obligation on the part of the department to extend relief given by an unconditional exemption notification and the same could not be refused merely because the appellants had omitted to claim that relief. Therefore, one cannot blindly apply the ratio of the priya blue case and also the larger bench decision of eurotex case to the facts of the present case. In fact, in the case of g. S. Metalica (cited supra), the tribunal held the view that when the goods are assessed to higher customs duty only on account of omission by the assessing officer to take note of the relevant customs notification, the same can be corrected under section 154 of the customs act, 1962 without taking recourse to appellate remedies provided in the customs act. While taking this view, the tribunal has followed the ratio of vst industries limited - 2007 (207) elt 513 (t) of the same tribunal wherein the ratio of the apex court's judgement in the cases of flock (india) ltd. And priya blue have been distinguished.
In these circumstances, we are of the considered view that the omission can be corrected under section 154 of the customs act, 1962. Therefore, the appellant is rightly entitled for the refund of the amount, which was collected without extending the benefit of an unconditional exemption notification. For the fault of the assessing officer, if the importer is compelled to pay huge revenue, it would definitely amount to mis-carriage of justice. Hence, we allow the appeal.

The present case of the appellant is squarely covered by the above judgements. As regards the revenue's contention that judgement of aman medical products ltd. Has been challenged before the hon'ble supreme court is observed that though the revenue has filed before the supreme court, the apex court has not granted the stay of operation of the order of the hon'ble high court of delhi. Therefore, the said judgement of the delhi high court is binding on me.

In view of the above judgements, which are on identical facts, they are of the view that the appellant is rightly entitled for refund of excess paid cvd. The order of the lower appellate authority is set aside. The appeal is allowed with consequential relief, if any. Needless to say that the sanctioning authority must verify the aspect of unjust enrichment before sanction of the refund. The appeal is disposed of in the above terms.

Decision:-appeal allowed.

Comment:-the analogy of the case is that relying on the various decision on same matter assessee is rightly entitled for refund of excess paid cvd. There is no need to challenge the assessment of bill of entry. Assessee is entitled for refund of excess paid duty which was collected without extending the benefit of an unconditional exemption notification. As per section 154 of customs act, 1962, clerical or arithmetical mistakes in any decision or order passed by the central government, the board or any officer of customs under this act, or errors arising therein from any accidental slip or omission may, at any time, be corrected by the central government, the board or such officer of customs or the successor in office of such officer, as the case may be. Therefore, assessee can claim refund of excess paid duty.

Prepared by:- monika tak

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PJ/CASE LAW/2014-15/2502

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