2025 (5) TMI 1048 - HC - Customs

Substantial questions of law - Refund claim under Notification No. 102/2007-Customs - Payment of Special Additional Customs Duty on the lubricating oil - time limit of one year from the date of payment of duty - HELD THAT - After taking into consideration we are of the opinion that this appeal being devoid of any merit no question of law much less any substantial questions of law arises from the impugned order passed by the CESTAT this appeal is accordingly dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

(i) Whether the one-year time limit for filing a refund claim under Notification No. 102/2007-Customs dated 14.09.2007 read with Notification No. 93/2008-Customs dated 01.08.2008 should be computed from the date of payment of duty at provisional assessment or from the date of finalization of provisional assessment.

(ii) Whether the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) was correct in holding that the refund claim filed in the instant case was within the prescribed time and not time-barred.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Computation of the One-Year Limitation Period for Refund Claims in Provisional Assessment Cases

Relevant Legal Framework and Precedents:

The refund claim time limit is governed by Notification No. 102/2007-Cus dated 14.09.2007 and its amendment Notification No. 93/2008-Cus dated 01.08.2008, which prescribes that refund claims must be filed within one year from the date of payment of duty. Section 27(1B)(c) of the Customs Act, 1962, provides that where duty is paid provisionally under Section 18, the limitation period of one year shall be computed from the date of adjustment of duty after final assessment or reassessment.

CBEC Circular No. 23/2010-Cus dated 29.07.2010 clarified that refund claims must be filed within one year from the date of payment of duty, regardless of whether the assessment is provisional or final. However, this Circular was partly held unsustainable by the Delhi High Court in Pioneer India Electronics Pvt. Ltd. v. Union of India (2014), which emphasized the primacy of Section 27(1B)(c) over the Circular.

Relevant judicial precedents include:

• Pioneer India Electronics Pvt. Ltd. (Delhi High Court, 2014)
• Suzuki Motorcycle India Pvt. Ltd. (Delhi Tribunal, 2019)
• Other High Court decisions analyzing the interplay between Notifications, Section 27, and Circulars.

Court's Interpretation and Reasoning:

The Court held that in cases where assessment is provisional, the payment of duty at provisional assessment cannot be treated as final payment. The limitation period for filing refund claims should begin from the date of finalization of the provisional assessment, i.e., the date of adjustment of duty after final assessment, as prescribed under Section 27(1B)(c) of the Act.

The Court observed that Notification No. 102/2007-Cus and Notification No. 93/2008-Cus do not provide any clause to the contrary, and therefore, the statutory provisions under Section 27(1B)(c) must prevail. The Circular No. 23/2010-Cus, which suggested the limitation period starts from provisional payment, was found to be inconsistent with the statute and thus not binding.

Key Evidence and Findings:

The facts showed that the Bills of Entry in the present case were provisionally assessed and subsequently finalized. The refund claim was filed within one year from the date of finalization of the assessment, not from the date of provisional payment.

The CESTAT relied on the above statutory provisions and judicial precedents to hold that the refund claim was timely.

Application of Law to Facts:

The Court applied Section 27(1B)(c) to the facts and concluded that since the refund claim was filed within one year from the date of final assessment, it was within the limitation period. The date of provisional payment was not determinative of the limitation period.

Treatment of Competing Arguments:

The Revenue argued that the limitation period should be computed from the date of provisional payment of duty as per the Notifications and Circular. The Court rejected this, relying on the statutory provision in Section 27(1B)(c) and judicial pronouncements that the limitation period must be computed from the date of final assessment in provisional assessment cases.

Conclusion:

The Court concluded that the limitation period for refund claims in provisional assessment cases must be computed from the date of final assessment and not from provisional payment. The refund claim filed within one year of finalization of assessment is not time-barred.

Issue (ii): Validity of CESTAT's Holding that Refund Claim is Within Time

Relevant Legal Framework and Precedents:

The CESTAT's decision was based on the above statutory provisions and judicial precedents, particularly the decisions in Pioneer India Electronics Pvt. Ltd. and Suzuki Motorcycle India Pvt. Ltd., which clarified the limitation period computation in provisional assessment cases.

Court's Interpretation and Reasoning:

The Court agreed with the CESTAT's reasoning that the refund claim was filed within the prescribed time limit. The CESTAT had correctly interpreted the Notifications in harmony with Section 27(1B)(c) of the Act and judicial precedents.

Key Evidence and Findings:

The refund application was filed on 04.07.2011, which was within one year from the date of finalization of the provisional assessment of the Bills of Entry dated 25.06.2010 and 24.01.2011. The original adjudicating authority had rejected the refund claim for one vessel on the ground of limitation, but the CESTAT allowed the appeal, holding the claim to be timely.

Application of Law to Facts:

The Court applied the statutory provisions and precedents to uphold the CESTAT's decision that the refund claim was not barred by limitation.

Treatment of Competing Arguments:

Revenue's reliance on judgments where no provisional assessment was involved was rejected as inapplicable. The Court distinguished those cases on facts and emphasized the primacy of statutory provisions over circulars and notifications when inconsistent.

Conclusion:

The Court held that the CESTAT's decision allowing the refund claim as within time was legally correct and sustainable.

3. SIGNIFICANT HOLDINGS

The Court preserved the following crucial legal reasoning verbatim from the CESTAT's order:

"When the assessment is provisional, it cannot be said that the duty which was paid during the provisional assessment was a final payment of duty. Final payment of duty is confirmed as and when the assessment of Bills of Entry is finalized. Therefore, the date of finalization of bills of entry should be reckoned as the actual date of payment and refund filed within one year from finalization of assessment to be treated as refund claim filed within one year."

Further, the Court reiterated the Delhi High Court's observations in Pioneer India Electronics Pvt. Ltd.:

"The limitation of one year shall be computed from the date of adjustment of duty after the final assessment thereof or in case of reassessment, from the date of such re-assessment."

Core principles established include:

• The limitation period for refund claims under the Customs Act in provisional assessment cases must be computed from the date of final assessment as per Section 27(1B)(c) of the Act.
• Notifications and Circulars cannot impose more onerous or restrictive limitation periods than those prescribed by statute.
• Refund claims filed within one year of final assessment are not time-barred, even if filed after the provisional payment.
• The Circular No. 23/2010-Cus, to the extent it conflicts with Section 27(1B)(c), is not sustainable.

Final determinations on each issue:

(i) The one-year time limit for refund claims is to be computed from the date of finalization of provisional assessment, not from the date of provisional duty payment.

(ii) The refund claim in the instant case was filed within the prescribed limitation period and is therefore not time-barred. The CESTAT's order allowing the refund claim was correct and legally sustainable.