2025 (7) TMI 1149 - AT - Customs

Refund of excess duty paid - Rejection of refund claim on the ground of time limitation - Project import scheme - Finalization of Provisional Assessment of Bill of Entry - Unjust Enrichment - HELD THAT - It is found that in the Order-in-Appeal dated 13.07.2009 the First Appellate Authority had set aside the rejection of refund claim which had become final with no one challenging the same before a higher Forum. Following the directions therein it appears that the Bills of Entry were finalized and only thereafter a speaking OIO dated 15.12.2010 came to be passed whereby refund of excess duty paid by the Appellant was ordered. Documents came to be scrutinized by the Assistant Commissioner once again who sanctioned the refund vide OIO dated 16.11.2011 and hence this order is clearly in the nature of giving effect/consequential order while the speaking order is the OIO dated 15.12.2010. The department did not challenge the OIA dt. 13.07.2009 and nor did it challenge above OIO dt 15.12.2010 and therefore the setting aside of an effectively consequential/giving effect order cannot shake the very foundation laid-down vide a speaking OIO. In this Order-in-Original is there a finding as to the Appellant not passing the tax incidence and hence it is sufficient to hold that the appellant s claim was very much in order and that the Revenue s Grounds of Appeal before the OIA resulting in the impugned order are the ones that should have been ideally filed against the other OIO. The First Appellate Authority has thus clearly fell in error in setting aside the Order-in-Original which has prompted the denial of a valid refund claim of the Appellant and hence the same cannot sustain. In view of the above the setting aside of the Order-in-Original by the First Appellate Authority is being incorrect the same is liable to set aside. Appeal allowed.

Summary

ISSUES:

Whether a refund claim filed after the finalization of provisional assessment is time-barred under the Customs Act and related notifications.Whether the First Appellate Authority erred in setting aside the Order-in-Original sanctioning refund of excess duty paid.Whether an order that is consequential or in the nature of giving effect to a prior speaking order can be set aside independently without challenging the foundational speaking order.

RULINGS / HOLDINGS:

The refund claim filed after finalization of assessment was not time-barred as per the provisions and Public Notice No.45/2004 dated 10.03.2004; the claim was premature if filed before finalization but valid thereafter.The First Appellate Authority erred in setting aside the Order-in-Original sanctioning refund, as that order was a "speaking order" based on Explanation II to Section 27 of the Customs Act, 1962, and the subsequent order was merely consequential.An order that is "clearly in the nature of giving effect/consequential order" cannot shake the foundation laid down by a prior speaking Order-in-Original which was not challenged by the Revenue; therefore, the setting aside of such consequential order is unsustainable.

RATIONALE:

The Court applied the statutory framework under the Customs Tariff Act, 1975, Customs Act, 1962, and relevant notifications including Public Notice No.45/2004, focusing on the timing and validity of refund claims post-finalization of assessment.Explanation II to Section 27 of the Customs Act, 1962 was pivotal in recognizing the validity of the refund claim after finalization of assessment and the requirement for a speaking order sanctioning refund.The Court emphasized the principle that a consequential or giving effect order cannot be independently set aside without challenging the foundational speaking order, reinforcing procedural propriety and finality in customs adjudications.No dissent or doctrinal shift was noted; the Court relied on established customs law principles and prior orders which remained unchallenged by the Revenue.