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Commissioner of Customs (Exports) Custom House Versus M/s. Sayonara Exports Pvt. Ltd., Customs, Excise & Service Tax Appellate Tribunal

2015 (3) TMI 861 - MADRAS HIGH COURT

Denial of refund claim - Section 27 - Whether claim of refund arising out of final assessment to be made vide an application u/s 27 or the same has to be refunded immediately u/s 18 not requiring assessee to move an application – bill of entries of import were provisionally assessed on 24.08.98 & 02.02.99 and duty was paid – refund arised on final assessment on 21.06.99, 15.06.99 – whether clause of unjust enrichment u/s 27(2) would be applicable - Held that:- The assessee has paid provisional d .....

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they do not have retrospective effect. - Following decision of COMMISSIONER OF CUSTOMS Versus INDIAN OIL CORPORATION [2012 (1) TMI 31 - DELHI HIGH COURT] - Decided in favor of assessee. - C.M.A. No. 961 of 2008, M.P. No. 1 of 2008 - Dated:- 6-3-2015 - R. Sudhakar And R. Karuppiah,JJ. For the Appellant : Mr. P. Mahadevan For the Respondents : Mr. B. Satish Sundar for R-1 JUDGMENT (Delivered By R. Sudhakar, J.) Aggrieved by the order of the Tribunal in dismissing the appeal filed by it, the appel .....

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provision assessment without filing an application for refund under Section 27 of the Customs Act, 1962? ii) Whether the Tribunal is right in not considering the legal issue that there cannot be an order of refund without application and that the application should be within the time stipulated in the statute? iii) Whether the extra duty deposit made by the 1st respondent partakes the character of customs duty so as to attract the provisions of Section 27 of the Customs Act? iv) Whether the cla .....

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ional assessment on 9.6.00 and forwarded the file to the Refund Section for refund of the EDD. The Assistant Commissioner of Customs (Refund), suo motu, passed an order on 15.9.05 holding that no refund application has been filed as required under Explanation II to Section 27 of the Act and the refund application should have been filed within six months from the date of finalisation of provisional assessment and, therefore, rejected the claim. The relevant portion of the order is extracted herei .....

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to the importer/claimant. Therefore, I pass the following order in view of above discussion : ORDER I reject the refund amount of ₹ 1,13,004/- as not claimed. 3. Aggrieved by the same, the respondent/importer went on appeal before the Commissioner (Appeals), who, on the facts of the case, allowed the appeal holding that the EDD is only a deposit as a protection to safeguard the interests of the Revenue and it is not a deposit of difference in terms of Section 27 of the Act. For better cla .....

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ut only a pre-deposit for availing the right of appeal ...... The extra duty deposit of 1% has been obtained from the appellants as a precaution to safeguard the interests of revenue. If after final assessment any part of this deposit is found in excess it is liable to be refunded suo motu once the bill of entry is finalised, or atleast on a simple letter request by the importer, without making him run from pillar to post. In my view the term 'extra duty deposit' is a misnomer and has to .....

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id towards the declared quantity of the goods, where they would have been eligible for a refund of ₹ 7,164/- owing to the shortage, if they had filed a claim on time for the same in keeping with Explanation II to Sec. 27 ibid. Since this appeal is with respect to EDD and in view of the discussions above, the extra duty deposit made cannot be treated as a duty for the purpose of Explanation II to Section 27 and the said amount is liable to be refunded to the appellants. The appeal therefore .....

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claim for refund. For better clarity, the relevant portion of the order of the Tribunal is quoted hereinbelow :- 2. ..... The provisions of Section 18 of the Customs Act governing provisional and final assessments of imports and exports are similar to the provisions of erstwhile Rule 9B of the Central Excise Rules, 1944. Under either of these provisions, any excess amount of duty found upon finalisation of assessment is liable to be paid to the assessee who is entitled to refund. In the present .....

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rtment is bereft of bona fides and the same is dismissed. Aggrieved by the said order of the Tribunal, the appellant/Revenue is before this Court by filing the present appeal. 5. Learned standing counsel appearing for the Revenue placed emphasis on para-104 of the order of the Supreme Court in Mafatlal Industries Ltd. & Ors. - Vs Union of India (1997 (5) SCC 536) to drive home the point that the provisions of Section 27 of the Customs Act analogous to Section 11B of the Customs Act will be a .....

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y be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case .....

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be, would be governed by Section 11-B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9-B (5) reagitating the issues already allowed, it would obviously be governed by Section 11-B. It follows logically that position would be same in the converse situation. (Emphasis supplied) 6. Admittedly, it is not the case of the department that provisional assessment order, which has been finalised, is the subject matter of further appeal or any proce .....

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as the claim in the present case arose prior to 13.7.06. The said aspect has been clarified by the Gujarat High Court in Commissioner Vs Hindalco Industries Ltd. (2008 (231) ELT 36 (Guj.)), which view has been affirmed by the Delhi High Court in Commissioner of Customs Vs Indian Oil Corporation (2012 (282) ELT 368 (Del.)), wherein the Delhi High Court held as follows :- 11. Gujarat High Court in the case of Hindalco Industries Ltd. (supra) on the other hand has referred to and considered the ame .....

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tion 18 of the Act. On a plain reading the distinction between Section 18 as it stood prior to amendment, i.e., upto 12th July, 2006 and subsequent to the amendment, i.e., with effect from 13th July, 2006 becomes apparent. The difference is stark and revealing and it is not possible to agree with the contention of Revenue that such amendment has to be understood as clarificatory in nature. This is more so, when one reads the amendments made in 1998 and the amendment made in Rule 9B of the Centra .....

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and (5) to Section 18 of the Act, have been inserted to provide for a mechanism to regularise the payments of duty short levied and interest thereon and duties that are to be refunded on finalization of provisional assessment and in this context in the report of the Standing Committee on Finance it has specifically been noted that this amendment became necessary because Section 18 of the Act which provides for provisional assessment of duty presently (i.e.upto 12th July, 2006) does not provide .....

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ered to be clarificatory provisions and in the same vein the newly inserted Sub-section (5) deserves consideration. Thus in effect upto 12th July, 2006 no provision existed in Section 18 of the Act which would permit Revenue to invoke principles of unjust enrichment in relation to duty paid in excess, found to be so, upon finalization of provisional assessment under Section 18 of the Act. 20. Hence, the reference to provisions of Section 27 of the Act which generally deals with claim for refund .....

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t cannot legislate. This is a salutary principle of interpretation. Furthermore, as noticed hereinbefore, the Apex Court has in no uncertain terms drawn the distinction between making of refund and claiming of refund. The High Court cannot equate the two in light of the authoritative pronouncement of law by the Apex Court. 21. Therefore, on both counts, in light of the authorities referred to hereinbefore, and on interpretation of provisions of Section 18 of the Act, on finalisation of assessmen .....

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by the Bombay High Court in the case of Bussa Overseas and Properties Pvt. Ltd. (supra). The decision of the Gujarat High Court in the case of Hindalco Industries Ltd. (supra) has been followed by Orissa High Court in CCE, C. & ST, Bhubaneshwar - I Vs. Paradeep Phosphates Ltd. 2010 (252) ELT 502 (Ori.). The said decision also refers to the three earlier judgments of the Supreme Court mentioned above. 19. We have considered Explanation II to Section 27(1) and whether in view of the said Expla .....

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after the final assessment and the adjustment, if still the Assessee is not satisfied with the adjustment and claims excess amount as refund. Explanation II will have no application in cases where admittedly after final adjustment, refund is due to the Assessee. This is explained with the following illustration: Duty paid provisionally ₹ 100 Duty finally assessed ₹ 60 Duty to be refunded ₹ 40 In this case Explanation II will have no application since no claim for refund is made .....

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alt with and explained in the second portion of paragraph No. 104 of Judgment in case of Mafatlal Industries (supra)." 20. The two situations are relevant and important. In the first situation the assessee has paid provisional duty which gets reduced on final assessment. The assessee, therefore, becomes entitled to refund which is payable in terms of Rule 9B of the Excise Act, 1944 or Section 18 of the Act. For refund on this account, no application is required to be filed under Section 27 .....

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ay occur after the passing of the final assessment, on account of rectification under Section 154 of the Act or because of any other reason, as a result of which the final order suffers an amendment or a change and some amount becomes refundable. As far as Section 18 of the Act is concerned, when an amount becomes refundable after a final order is passed, the same has to be refunded immediately and for this purpose the assessee is not required to move an application under Section 27 and accordin .....

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