Whether assessee is liable to claim refund for amount deposited during investigation when there was no adjudication order?

PJ/Case law/2014-15/2204

Case:- RAYMOND LTD. Vs COMMISSIONER OF CUSTOMS (AIRPORT), MUMBAI

Citation:- 2014 (300) E.L.T. 523 (Tri. - Mumbai)

Brief facts:- The appellant was in appeal against the impugned order wherein the refund claim had been rejected as pre-mature.

The facts of the case in brief were that the appellant M/s. Raymond Ltd. had imported SAP software from SAP AG, a German Corporation. There was a dispute regarding the valuation of the goods, therefore, the DRI, Bangalore initiated an inquiry against the appellant. During the course of investigation, one of the officials of the appellant admitted the undervaluation of the software. Pursuant to the enquiry, the appellant paid an amount of Rs. 70,19,299/- (including duty of Rs. 53,04,000/- and interest of Rs. 17,15,299/-) without prejudice to their contention, in December, 2008. A show cause notice dated 31-8-2009 was issued to the appellant and adjudication of the said show cause notice was still pending. As no show cause notice was issued appellant, the appellant filed a refund claim of the amount deposited as mentioned hereinabove on 9-6-2009. The refund claim of the appellant was rejected on the premise that the same was pre-mature. Hence the appellant is in appeal before Tribunal.

Appellant’s contentions:- The learned Counsel for the appellant submitted that as the amount deposited by them during the course of investigation had not been adjusted against any duty demand therefore, the same had to be refunded. He also relied on various decisions of this Tribunal as well as the Hon’ble Supreme Court and the Hon’ble High Court of Punjab & Haryana such as Ganesh Enterprises v. CCE, Ahmedabad - 2009 (240) E.L.T. 106 (Tri.-Ahmd.), Florida Electrical Industries Ltd. v. CCE, Delhi - 2004 (168) E.L.T. 393 (Tri.-Del.), Raghu Exports v. Union of India - 2008 (229) E.L.T. 655 (P&H) and prayed that the refund claim be sanctioned to them.

Respondent’s contentions:- On the other hand, the learned A.R. appearing for the Revenue strongly opposed the contention of the learned Counsel and submitted that in this matter the appellant themselves had admitted their duty liability during the course of investigation and they had voluntarily paid the duty amount. He further submitted that although the show cause notice had been issued in the year 2009 but in this case there were more than 150 parties and against all of whom investigations were being carried out by the DRI. One adjudicating authority had been appointed by the C.B.E. & C. only in March, 2012. That was why adjudication could not be taken place till date. He further submitted that the amount pre-deposited by the appellant during the course of investigation being voluntarily, the decisions relied on by the appellant was not relevant to the facts of this case as in those cases the payment was made under force. He further submitted that the payment made by the appellant was to be deemed under Section 28(2)(b) of the Customs Act, 1962. Therefore, the refund claim filed by the appellant was to be rejected.

Reasoning of judgment:- It was a fact on record that the appellant paid the amount mentioned hereinabove during the course of investigation. A show cause notice was issued in August, 2009 but the adjudication of the said show cause notice had not been finalized till to date. The case law, relied on by the learned Counsel have dealt with the issue where the duty had been paid during the course of investigation and the adjudication could not be finalized particularly in the case of Raghu Exports (supra) wherein the Hon’ble High Court of Punjab and Haryana had reported the facts that “there was no amount outstanding against the petitioner but still under duress and threat the partners of the petitioner were forced to deposit the draft of Rs. 1 Crore and post dated cheques of Rs. 1.5 crores. The fact was disputed by the counsel for the respondents. He stated that the said draft was deposited by the partners of the petitioner along with the cheques voluntarily when the search and seizure was conducted by the department. It had been pointed out by him that the investigation was under way and the liability of the petitioner could go much more than the amount voluntarily deposited by the petitioner. He had further stated that the cheques of Rs. 1.5 crores were presented to the bank and the same have bounced. He contends that the prayer of the petitioner thus may not be granted. However, he had not disputed that as of date there was no amount outstanding against the petitioner.” In that set of facts, the Hon’ble High Court of Punjab & Haryana ordered for refund of the amount deposited during the course of investigation.

In this case also, it was not disputed that the appellant had paid the amount during the course of investigation but there was no adjudication order and no confirmation of demand as on date against the appellant. In these circumstances, as we were bound by the decisions relied on by the appellant cited hereinabove, we set aside the impugned order and allow the appeal with consequential relief.

The adjudicating authority was directed to expedite the case and sanction the refund claim within thirty days of receipt of this order.

Decision:- Appeal was allowed.

Comment:- The substance of the case is that if the assessee had paid the amount during the course of investigation but there is no adjudication order and no confirmation of demand till date against the assessee, in such circumstances, the assessee becomes eligible for claiming the refund of the same.

Prepared By: Ranu Dhoot

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PJ/Case law/2014-15/2204

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