Whether refund claim be rejected on the ground that the letter of Superintendent regarding finalization of B/E was not challenged?

PJ/CASE LAW/13-14/2065

Case:- SAURASHTRA CEMENT LTD. V/S CC, JAMNAGAR

Citation:- 2013 (297) E.L.T. 365 (Tri.-Ahmd.)

Brief Facts:- The appellant importer had imported coal in bulk form under various B/Es, from time to time, which were assessed provisionally at the time of clearance. The customs department desired to levy and collect coal cess @ Rs. 10/- per MT on the steam coal imported by the appellant. Coal cess @ Rs. 3.5 per MT was paid provisionally. The Superintendent of Customs, Customs House, Porbandar in his letter dated 30.3.2005 addressed to M/s Velji & Sons, Custom House Agent informed that all the bills of entry filed by them on behalf of the various importers in respect of import of coal/coke up to 31.3.2004 have been treated as finally assessed by this Customs House. Subsequently, show cause notices were issued to both the appellants for recovery of differential coal cess @ Rs. 6.5 per MT and in both the cases the adjudicating authority dropped the demand holding that no cess is liable to be paid by the appellants vide his orders No. 17/2007 and 8/2007 both dated 26.12.2007. Thereafter M/s. Saurashtra Cement Ltd. filed a refund claim which was sanctioned but Revenue filed an appeal on the ground that the appellants had not challenged the finalization of bill of entry and therefore consequential relief was not available. In the case of the appellant M/s. Gujarat Sidhee Cements Ltd., the refund claim was rejected and on an appeal filed by the appellant, appeal was also rejected. Both the appellants filed this appeal against the rejection of refund claim.

Appellant’s Contention:-The appellants contended that the impugned order has completely lost sight of the fact, despite being pointed out that the refund was not being claimed on account of finalization of assessment, but on account of the differential duty demand being dropped alongwith consequential relief vide OIO dated 26.12.2007. While they did not appeal against the purported finalization of assessment, even the department did not appeal against such OIO dated 26.12.2007 dropping coal cess demand and granting consequential relief. The impugned order has completely brushed aside the crucial aspect.
They further submitted that the whole issue that whether finalization was challenged by them or not has become totally academic, in as much as while whatever be the final assessment, once duty demand itself stands dropped alongwith consequential relief there is nothing missing in them seeking and getting such consequential relief. The impugned order has not considered this aspect at all. As regards the appeals filed by them, the Revenue has never disputed that the refund claim made by them, pursuant to dropping of duty demand vide OIO dated 26-12-2007 was within time and the bar of unjust enrichment is not applicable. These were the specific findings in the said OIO dated 22-5-2008. In so far as M/s. Gujarat Sidhee Cement Ltd. is concerned, while the refund claim was made within prescribed period from the OIO dated 26-12-2007 granting consequential relief (as provided in Section 27), and the factum of duty burden not being passed on was also shown from financial records, the lower authorities have not considered this aspect in the same manner as done in the case of M/s. Saurashtra Cement Ltd.
Further, as per settled legal position, coal cess was never payable by them which is not even in dispute. However, this issue is not germane to the issue on hand as such. Coal cess is not a duty of customs and the customs department was not even allowed to collect the same. Any provisional assessment made in this regard, collecting such cess, even provisionally, can by no stretch of imagination be considered to be duty of customs, which attracts the rigors of Section 27, for the purpose of its refund. The impugned order, which fails to consider the correct legal as also factual position, therefore deserves to be quashed and set aside, alongwith consequential relief, if any, to them. The refund cannot be denied and/or recovered from them for the same reasons.

Respondent’s Contention:-The Respondents submitted that the facts remains that the final assessment issued by the Superintendent has not been challenged till date. Therefore the lower authorities cannot be found fault with for the action taken.

Reasoning of Judgment:- The Hon’ble Tribunal held that the procedure followed by the Revenue for finalization of provisional assessment is totally irregular. The finalization of assessment should have been done by giving the details of bills of entry such as bill of entry number, date of bill of entry, duty provisionally assessed, duty finally assessed and the difference payable or refundable. Section 18 of Customs Act, 1962 is relevant. The section provides that when the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed and if the amount so paid falls short of or is in excess of the duty finally assessed, the importer or the exporter of the goods shall pay the deficiency or be entitled to the refund, as the case may be. Further, they held that the provisions of Section 18 relevant to the issue clearly shows that the assessing officer has to indicate the amount paid and adjusted. In the absence of any such details, the letter issued by the Superintendent cannot be considered as an order finalizing the assessment. It is also to be noted that the letter is addressed to CHA and the party have not been informed. However this cannot be considered as a serious omission since CHA was authorized to file bill of entry on behalf of the appellants.
As rightly submitted by the appellant, not only there is no proper order of final assessment, the department also has not filed an appeal against the order of the Assistant Commissioner dated 26-12-2007 holding that no cess was liable to be paid. They also relied upon the decision of the Hon’ble High Court of Delhi in the case of Hind Agro Industries Ltd. v. Commissioner of Customs reported in 2008 (221) E.L.T. 336 (Del.) in support of their contention that since no cess was payable, question of processing a claim of refund of cess in terms of Customs Act does not arise since payment was made mistakenly. The Hon’ble High Court held that refund application made within a period of three years after discovery of mistake is not barred by limitation. However they cannot consider this decision since such relief can be given only by the High Court or the Supreme Court and this Tribunal being a creation of statute cannot go beyond the statute. However we have already held that the appellants cannot be found fault with for not filing appeal against the letter of the superintendent and therefore on this ground the refund claim cannot be denied. Accordingly they hold that the stand taken by the lower authorities that appellants are not eligible for refund having not challenged the letter of the superintendent cannot be sustained and accordingly the impugned orders are set aside and appeals allowed.

Decision:- The appeal was allowed.

Comment:-The substance of this case is that when the Customs authorities are not empowered to collect coal cess, the appellant cannot be found in fault with for not filling appeal against the letter of Superintendent finalising the bill of entry. Therefore, on this ground, the refund claim cannot be denied. Further, the letter finalizing provisional assessment has also not given details of date and number of bills of entry, duty assessed provisionally and finally assessed and difference payable or refundable, hence, the impugned letter could not be considered as an order finalizing assessment. As such, the assessee is rightly admissible for wrong amount deposited by them as coal cess.

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PJ/CASE LAW/13-14/2065

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