TMI Blog2012 (11) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... s any assessment order. Therefore we cannot countenance the submission. We hold that the appellants cannot be denied refund on the ground that they have not availed the remedy of appeal and further appeal to CESTAT New Ground before the Tribunal - held that:- Tribunal did err in refusing to hear the appellant only on the ground that the ground had not been raised earlier. Rule 10 was sufficiently widely framed to allow the Tribunal to do so. Having regard to the fact that the Tribunal was itself considering the issue on a contested (sic connected) hearing there was no reason why the appellant should have been shut out from pleading its case on the same basis. - CESTAT was not precluded from hearing and considering a new ground which related to the subject matter of the dispute before them. The question whether a refund claim under Section 27 of the Act would lie when the assessee did not file appeal against the speaking/assessment order is certainly a question relating to subject matter of the suit and therefore the CESTAT cannot be denied jurisdiction to consider the question raised by the Revenue during the course of the arguments. Unjust enrichment - held that:- There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006. Despite this, the Customs Officials from Kakinada Port insisted for payment of cess and all the appellants paid the cess against the shipping bills after the repeal of the Cess Act. The levy and collection, indisputably was not authorized by law. The appellants filed claims under Section 27 of the Act for refund of cess of export of rice consequent on its abolition. By a speaking order dated 30-10-2006, the Assistant Commissioner of Customs, Division-I, Kakinada having come to the conclusion that the bar of unjust enrichment clause is not applicable in the instant case since the incidence of duty has been borne by the agents on behalf of the exporters and had not been passed on to any other person refunded the entire cess amount paid against the shipping bills. 3. In purported exercise of powers under Section 129D of the Act, the CCE, Visakhapatnam called for the records relating to the speaking order of the Assistant Commissioner. On examining, he authorized the Assistant Commissioner to file appeals against the speaking orders in all the matters where refund claims were allowed. The CCE observed that the adjudicating authority erred in holding that the incidence of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied) 6. It appears that in their written arguments departmental representative raised a plea that when the assessee has not challenged the assessment order, claim for refund would not lie. Countenancing this plea the CESTAT rejected the appeals observing as under : As regards the claim that a refund claim for excess duty paid can be validly made without challenging assessment under the Act relying on the judgment of the Apex Court in the case of Karnataka Power Corporation Ltd. v. C.C. (Appeals), (2002) 143 E.L.T. 482 (S.C.), we note that a Larger Bench of the Tribunal had considered the ratio of the above decision and the decisions of the Apex Court in Flock India [2000 (120) E.L.T. 285 (S.C.)] case and Priya Blue Industries [2004 (172) E.L.T. 145 (S.C.)] case and held that a refund claim was not maintainable unless the assessment order in pursuance of which duty paid was challenged and modified/set aside. In the case of Maharashtra Cylinders Pvt. Ltd. v. CESTAT, Mumbai Ors., reported as 2011 (183) ECR 0059 (Bom.) = 2010 (259) E.L.T. 369 (Bom.), the Hon ble High Court of Bombay has observed as follows :- 8 .The Apex Court in the case of Priya Blue Industries Ltd. v. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Late Begum Noor Bano Alladin - 1993 (204) ITR 166 (A.P.) they would contend that unless the subject matter is one which necessarily arises out of determination made by the first appellate authority, the CESTAT could not have gone into such questions. In support of their submissions, the Counsel also relied on CIT v. Scindia Steam Navigation Co. Ltd. - 1962 (1) SCR 788. The Counsel for the appellants submits that the speaking order passed by the original authority allowed refund of claims; refund was made and therefore question of filing appeal against the speaking order passed by the Assistant Commissioner under Section 28(2) of the Act does not arise. Even where an assessment order under Section 17(5) of the Act is passed and the same is in favour of the assessee the question of filing appeal does not arise and if need arises the application for refund of customs duty can be made under Section 27 of the Act. They would rely on the decision in Hind Agro Industries Limited v. C.C.E. - 2008 (221) E.L.T. 336 (Del.). It is nextly contended that the refund claims by the appellants are not barred by unjust enrichment, though for the purpose of complying with the Cess Act it was menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers of the original authority and when the ground was specifically taken by the Revenue in the written arguments that the FOB value includes cess, the Tribunal cannot be said to be in error in deciding the issue of bar of refund claim for not availing appellate remedy. Lastly he would submit that an appeal to High Court under Section 131 of the Act would lie when the case involves substantial question of law and these appeals would not involve any substantial question of law and, therefore, they are not maintainable. Points for consideration 9. The two broad issues that would fall for consideration are bar of refund claims by unjust enrichment and consequences of bar of not filing appeals against the speaking orders. Bar of refund claims 10. An application for refund of any duty paid by a person in pursuance of an assessment or borne by him shall be made to the jurisdictional Assistant/Deputy Commissioner of Customs. Every such application shall ordinarily be made before the expiry of one year/six months from the date of payment of duty and interest if any paid on such duty, as the case may be. Further every such application for refund shall be accompanied by documentary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched. (iv) It is not open to any person to make a refund claim on the basis of a decision of a court or tribunal rendered in the case of another person. He cannot also claim that the decision of the court/tribunal in another person s case has led him to discover the mistake of law under which he has paid the tax nor can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the amended Order 41 Rule 22 sub-rule (1) a party in whose favour the decree stands in its entirety is neither entitled nor obliged to prefer any cross-objection. However, the insertion made in the text of sub-rule (1) makes it permissible to file a cross-objection against a finding. The difference which has resulted we will shortly state. A respondent may defend himself without filing any cross-objection to the extent to which decree is in his favour; however, if he proposes to attack any part of the decree he must take cross-objection. The amendment inserted by the 1976 amendment is clarificatory and also enabling and this may be made precise by analysing the provision. There may be three situations : (i) The impugned decree is partly in favour of the appellant and partly in favour of the respondent. (ii) The decree is entirely in favour of the respondent though an issue has been decided against the respondent. (iii) The decree is entirely in favour of the respondent and all the issues have also been answered in favour of the respondent but there is a finding in the judgment which goes against the respondent. 11. In the type of case (i) it was necessary fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea that the cess was borne by them and that it was not passed on to the foreign buyer. They also place reliance on the sale contract and Incoterms. There is no dispute that they are the official rules of International Chamber of Commerce of trade terms intended to facilitate conduct of international trade and are binding on all those who are engaged in International trade. After perusing these as well as the shipping bills we are convinced that FOB value (invoice) does not and could not have included the cess paid by the appellants and that the appellants did not pass on incidence of duty to the buyer. In the absence of any such material, the equitable principle of unjust enrichment does not bar refund claims under Section 27 of the Act. We would elaborate the reasons as follows. 17. The description in Stock v. Englis - (1884) 12 QBD 564 that in FOB contract the seller is bound at his expense to place the goods free on board a ship for transmission to the buyer, has undergone lot of changes in the business world. An FOB contract is described as flexible instrument. Benjamin s Treatise on Sale of Goods describes the relative duties of buyer and seller in the classic FOB contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made to an obligation of the seller or the buyer to undertake obligations in connection with passing the goods through customs of the country of export or import it is now made clear that this obligation does not only include the payment of duty and other charges but also the performance and payment of whatever administrative matters are connected with the passing of the goods through customs and the information to the authorities in this connection. Further, it has although quite wrongfully been considered in some quarters inappropriate to use terms dealing with the obligation to clear the goods through customs when, as in intra-European Union trade or other free trade areas, there is no longer any obligation to pay duty and no restrictions relating to import or export. In order to clarify the situation, the words where applicable have been added in the A2 and B2, A6 and B6 clauses of the relevant Incoterms in order for them to be used without any ambiguity where no customs procedures are required. It is normally desirable that customs clearance is arranged by the party domiciled in the country where such clearance should take place or at least by somebody acting there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight and vessel is to buyer s vessel owner s account. 21. As per the above clause all export duties, taxes, levies etc., on cargo present or future in India shall be for seller s account and all import duties, taxes, levies etc., present or future in the country of destination shall be for buyer s account. Further all taxes/duties on freight and vessel is to vessel owner s account. Buyer s obligations are found in Part B of FOB contract. As per point B2 read with B6 the buyer must obtain any import license where applicable and pay all customs formalities for the import of goods and where necessary for their transit through any country. From a perusal of the FOB contract terms in Incoterms, there cannot be any doubt that it is always the duty and obligation of the seller to bear the costs of customs formalities as well as the duties, taxes and charges payable upon export. 22. In these appeals, the invoice value is also FOB value. Therefore it cannot be said to include the duty paid under the Cess Act and, therefore, the presumption under Section 28D of the Act stands rebutted by the appellants. The CCE (A) went utterly wrong in construing the point A6 ignoring paragraph 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that have come up for consideration before the Courts. We may briefly refer to a couple of them. In Scindia Steam Navigation Co. Ltd. a Constitution Bench of the Supreme Court considered the scope of Section 66 of the Income Tax Act, 1922, which is similar to Section 256(1) of the Income Tax Act, 1961. After noticing the divergence of opinion among various High Courts with regard to the meaning of the words any question of law arising out of the Bench unanimously summed up the legal position as follows : (1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. (3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order. (4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it. 26. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal (Procedure) Rules, 1982. The Supreme Court held that the Tribunal has got wide power to hear and consider a new ground and decide the appeal. The relevant observations are as follows : Rule 10 of the 1982 Rules allows the parties to urge grounds not taken in the appeal provided the Tribunal grants leave to the parties to do so. The Tribunal has also been given a wide power to decide the appeal on grounds not taken in the memorandum of appeal. The only limitation on this power of the Tribunal is that the party affected must be given an opportunity of being heard in respect of the new grounds sought to be urged. According to M/s. Davangere Cotton Mills Ltd., the issue had been raised originally before the Tribunal and again before the third member when it was referred to the third member on a difference of opinion. Revenue had ample opportunity of dealing with the submission. Besides, it was submitted, that the issue was in any event being agitated in the matter of M/s. Coats Viyella (India) Ltd. and there was no question of taking the Revenue by surprise. We are of the view that the Tribunal did err in refusing to hear the appellant only on the ground that the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidence of duty has not been passed on to any other person. When the language in a taxing provision is plain, reading something which is not explicit is impermissible. However the scheme of Section 27 of the Act would itself suggest that a refund claim would always arise in pursuance of an order of assessment and if the order of assessment is adverse to a person, as long as such adverse order stands, refund claim may not lie because adverse order does not confer any right and, therefore, to come within the scope of Section 27(1) of the Act such a person has to necessarily avail the remedy of appeal before the hierarchy of authorities i.e., before the Commissioner (Appeals) under Section 128 of the Act, before the CESTAT under Section 129A of the Act, before the High Court under Section 130 of the Act, before the Supreme Court under Section 130E of the Act if it is a case of classification of goods for the purpose of specified rate of customs tariff. 31. In case an exporter/importer or a customs agent parts with customs duty under an Act which is no more in force or the duty is paid excessively than at required rate or duty is paid wrongly, is there any necessity for the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing its order. If this position is accepted then the provisions for adjudication in the Act and the Rules, the provision for appeal in the Act and the Rules will lose their relevance and the entire exercise will be rendered redundant. This position, in our view, will run counter to the scheme of the Act and will introduce an element of uncertainty in the entire process of levy and collection of excise duty. Such a position cannot be countenanced. The view taken by us also gains support from the provision in sub-rule (3) of Rule 11 wherein it is laid down that where as a result of any order passed in appeal or revision under the Act, refund of any duty becomes due to any person, the proper officer may refund the amount to such person without his having to make any claim in that behalf. The provision indicates the importance attached to an order of the appellate or revisional authority under the Act. Therefore, if an order which is appealable under the Act is not challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred an empty formality. In the case of self-assessment if the declaration made by the person liable to duty is accepted and such return also mentions about the refund of duty to be made, there would not be any necessity to file appeal before the departmental appellate authority or the statutory Tribunal. 35. In these cases all the appellants are exporters. By the time they exported the rice to foreign buyer under various shipping bills separately, as required under Section 28C of the Act, the amount of duty/cess was paid. Then the Cess Act was no more on the statute book. There is no dispute that the cess was paid under protest. But shipping bills were accepted and there was no assessment order. When the appellants moved the Assistant Commissioner under Section 27 of the Act, speaking orders/assessment orders were passed on 30-10-2006 accepting their plea that the appellants are eligible for refund in view of the abolition of the cess under various shipments. The speaking order itself is in favour of the appellants and, therefore, the question of filing appeals does not arise. A feeble submission is sought to be made by the Revenue that the shipping bill itself is an assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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