Whether assessment to be challenged if refund of excess duty filed on account of wrong exchange rate in bill of entry?

PJ/ Case Law/2013-14/1623

Case:- M/s SECURE METERS LTDVs COMMISSIONER OF CUSTOMS, NEW DELHI

Citation:- 2013-TIOL-984-CESTAT-DEL

Brief facts:- The appellants imported certain electronic components and filed the bill of entry for clearance of the goods. After assessment of duty, the goods were cleared on payment of duty. Subsequently the appellant found that higher amount of duty had been paid, as while the currency in which the payment had been made was EURO, the CHA, by mistake, had mentioned the currency as Great Britain Pounds and the declared value in foreign currency had been converted into Indian currency on that basis while the conversion into Indian currency should have been made by applying rupee - EURO exchange rate. The appellant accordingly filed a refund claim for an amount of Rs. 11, 32,502/- to the Assistant Commissioner. The Assistant Commissioner, however, rejected the refund claim vide order-in-original dated 4/1/02 by which the refund claim was rejected on the ground that the appellant have not challenged the assessment order and also that they have not produced any evidence that the incidence of duty whose refund is being claimed, had not been passed on to their customers, as even though the imported electronic components were used by them in the manufacture of the finished goods, the principle of unjust enrichment is applicable even in such case in terms of the Apex Court's judgment in the case of Union of India vs. Solar Pesticide Pvt. Ltd. reported in 2000 (116) E.L.T. 401 (S.C.) = (2002-TIOL-57-SC-CX). On appeal to Commissioner (Appeals), the above order of the Assistant Commissioner was upheld vide order-in-appeal dated 26/9/07. The Commissioner (Appeals), however, dismissed the party's appeal only on the ground that the appellant had not challenged the assessment order and, therefore, in view of Apex Court's judgment in the case of Priya Blue Industries Ltd. vs. CC (Preventive) reported in 2004 (172) E.L.T. 145 (S.C.) = (2004-TIOL-78-SC-CUS) the claim cannot be entertained. The Commissioner (Appeals) did not go into the question of unjust enrichment. Against this order of the Commissioner (Appeals), this appeal has been filed.

Appellants contention:- The appellant, pleaded that the refund had arisen only due to wrong application of exchange rate, that while the invoice of the, goods was in terms of EURO, the CHA while filing the bill of entry, due to clerical error, mentioned the currency as Great Britain Pound and converted the value into Indian rupees by applying British Pound - rupee exchange rate, instead of EURO rupee exchange rate, that the Tribunal in the cases of Tata Iron & Steel Co. Ltd. vs. CC (Port), Kolkata reported in 2006 (202) E.L.T. 719 (Tri. - Kolkata) = (2006-TIOL-110 4-CESTAT-KOL), and Celcius Refrigeration Pvt. Ltd. vs. CC, New Delhi reported in 2007 (213) E.L.T. 364 (Tri. - Del.) has held that when on account of application of wrong exchange rate due to clerical reason, higher duty has been paid, for the purpose of refund of excess duty, reassessment is not required and such clerical error can be corrected under Section 154 of the Customs Act, 1962 and that in such cases the Apex Court's judgment in the case of Priya Blue Industries Ltd. vs. CC (Preventive) (supra) would not be applicable, that same view has been taken by the Tribunal in the case of ABB Ltd. vs. CC, Mumbai reported in 2005 (181) E.L. T. 71 (Tri. - Del.) = (2005-TIOL-1220-CESTAT-MUM) and Aman Medical Products Ltd. vs. CC, Delhi reported in 2010 (250) E.L. T. 30 (Del.) = (2009-TIOL-566-HC-DEL-CUS) and that in view of this, for filing the refund claim, the assessment order was not required to be challenged, that the refund claim is not hit by the unjust enrichment and the appellant had produced evidence in this regard, that the Commissioner (Appeals) has not gone into the question of unjust enrichment and that in view of this the impugned order is not correct.

Respondents Contention:-The respondent defended the impugned order by reiterating the findings of Commissioner (Appeals) and also emphasized that since the appellant had used the imported goods as raw material in the manufacture of finished goods, the principle of unjust enrichment would be applicable in view of Apex Court's judgment in the case of UOI vs. Solar Pesticide Pvt. Ltd. (supra) and that in this regard the appellant have not produced any evidence. He, therefore, pleaded that there is no infirmity in the impugned order.

Reasoning of Judgement:- After considering both the sides, it was held that there is no dispute about the fact that the invoice of the imported goods was in terms of EURO, but in the bill of entry, the currency was mentioned as Great Britain Pound and value of the goods was converted into Indian currency - by applying Great Britain Pound - rupee exchange rate instead of EURO - rupee exchange rate. The point of dispute is as to whether before filing the refund claim of the excess duty paid due to wrong application of exchange rate, the assessment order was required to be challenged. We find that this very issue had been dealt with by the Tribunal in the cases of Tata Iron & Steel Co. Ltd. vs. CC (Port), Kolkata (supra) and Celcius Refrigeration Pvt. Ltd. vs. CC, New Delhi (supra), wherein the Tribunal has held that mention of wrong currency in the bill of entry as the application of wrong exchange rate is a clerical mistake and when on account of such clerical error a higher amount of duty has been paid the re-assessment is not required before filing of refund claim, as the clerical mistake can be correct in terms of the provisions of Section 154 of the Customs Act, 1962. The Hon’ble CESTAT find that same view was also been taken by the Hon'ble Delhi High Court in the case of Aman Medical Products Ltd. vs. CC, Delhi (supra), wherein the Hon'ble High Court held that for the purpose of filing refund, the assessment order is not required to be challenged when higher duty was paid due to inadvertence. In this case higher duty has been paid due to wrong application of exchange rate which was due to clerical error. The Hon’ble CESTAT, therefore, hold that before filing of the refund, it was not required for the appellant to challenge the assessment order and, as such, the judgment of the Apex Court in the case of Priya Blue Industries Ltd. vs. CC (Preventive) (supra) is not applicable to the facts of this case, and therefore, the impugned order upholding the rejection of the refund claim on this ground is not sustainable and is liable to be set aside.

In view of the above discussion, the impugned order is set aside. However, the matter is remanded to the Commissioner (Appeals) for examining the unjust enrichment angle and if the appellant produce convincing evidence that the incidence of duty whose refund is claimed by them, has not been passed on by them, they would be eligible for refund. The appeal stands disposed of as above.

Decision:- The impugned order is set aside and remanded back to check unjust enrichment.

Comment:- The crux of the whole case is there is no requirement to challenge the assessment order in order to claim refund claim of duty which was paid in excess due to clerical mistake of wrong exchange rate in Bill of entry. Accordingly, refund is admissible if there is no unjust enrichment.

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PJ/ Case Law/2013-14/1623

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