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M/s. Cosmo Films Ltd. Versus Commissioner of Central Excise & Customs Aurangabad

Period of limitation - Refund of excess duty paid in lieu of provisional assessment - Duty not been paid under protest - Import of Polypropylene Granules - Held that:- the Assistant Commissioner while ordering provisional assessments stated that I order that the duty leviable on such goods to be assessed provisionally under Section 18 of the Customs Act, 1962. Accordingly, the procedure of provisional assessment under Section 18 be followed until further orders. From this it appears that the pro .....

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found that the Commissioner (Appeals) had accepted the appellants letter as a refund claim, there being no evidence to the effect that the letter was not received by the Department. Even the order of the Assistant Commissioner does not categorically state that the letter dt. 28.3.1997 was not received by the department.

Therefore, since the department did not challenge the Commissioner (Appeals) order, the refund for this period is not time barred. The contention of the appellant is a .....

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er protest did not arise.

Whether the test of unjust enrichment will apply to provisional assessments - Held that:- in view of the various judgments the test of unjust enrichment will not apply to provisional assessments before 13.7.2006 when sub-section(5) to Section 18 was introduced. Sub-Section 18(5) brought the concept of unjust enrichment into Section 18. Therefore, the test of unjust enrichment applies to refunds arising out of finalization of provisional assessments. - Decided .....

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herefore only because they did not increase the price when they paid duty does not by itself lead to a conclusion that the incidence of duty was not passed to the customers. The appellant had argued before the Commissioner appeals that they were showing the refund claim as receivables in their books of account. However on being given time by the Commissioner, they failed to produce a Chartered Accountants certificate certifying that the element of duty was not included in the cost of their produ .....

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vocate For respondent Shri S.J. Shahu, Assistant Commissioner (A.R) Per: P.S. Pruthi 1 The appellant, a manufacturer of BOPP Films and Electric Capacitor Grade Films, claimed concessional rate of duty on import of Polypropylene Granules under Sr. No. 145 List-B of Notification No. 64/95-Cus. Dt. 16.3.1995. The Assistant Commissioner, pending enquiry about applicability of Not64/95, vide order dt. 16.5.1995 assessed the goods provisionally under Section 18 of the Customs Act in respect of Ex-Bond .....

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e Assistant Commissioner extended the benefit of Notification No. 64/95 vide his order dt. 25.7.1997. In appeal, the Commissioner (Appeals) vide order dt. 27.10.1999, set aside the Order-in-Original dt. 25.7.1997 and remanded the case to the Assistant Commissioner for de novo consideration. However, the appellant preferred an appeal to CESTAT who vide Order No. C-II/1585-86/2000/WZB dt. 1.6.2000 set aside the Order-in-Appeal and restored the Order-in-original dt. 25.7.97 passed by the Commission .....

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-Original No. 146/99 dt.12.7.99 rejected the refund claim as time barred because the duty had not been paid under protest during the impugned period. In appellate proceedings, the Commissioner (Appeals) vide OIA No. A/216/2000 dt. 27.9.2000 set aside the above order-in-original and remanded the case to the Assistant Commissioner to re-examine the issue of limitation. He held that the appellants letter dt. 28.3.97 should be treated as a refund claim and in that case the claim will not be hit by l .....

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ed by the A.C., the provisional assessment order dt.16.5.95 got restored. Hence, all assessments were provisional. According to him since the appellant continuously pursued the matter at all levels, the payments made by them are obviously under protest. And there was no requirement of a formal letter of protest for each Bill of Entry. He referred to OIA dt. 22.12.2000 in which the Commissioner (Appeals) observed that the appellants letter dt. 28.3.97, if received, will have to be treated as a re .....

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re assessed provisionally. He further contended that the order dt.9.8.96 finalizing the Bill of Entry No 5 dt 16.5.95 refers to subsequent bills of entry also. Therefore, this indicates that all Bills of Entry were assessed provisionally. 3.2. The Ld. Counsel relied on the following judgments holding that principles of unjust enrichments are not applicable to refunds arising out of finalization of provisional assessment: (a) Scientific Instruments Co. Vs. Commissioner of Customs 2012 (286) ELT 2 .....

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ed rejection because the appellant had paid the duty without any protest for the clearances effected during the period January 96 to February 97 and did not request for provisional assessment. He relied on the judgement of Honble Supreme Court in the case of Bussa Overseas and Properties Pvt. Ltd. Vs. UOI 2004 (164) ELT A177 (SC) in which the Honble Apex Court dismissed the partys SLP against the order of the Bombay High Court 2003 (158) ELT 135 (Bom) holding that all claims of refund arising fr .....

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f provisional assessment under Section 18 be followed until further orders. From this it appears that the provisional assessment was done for such goods, i.e. for all Bills of Entry during the period 16.5.1995 onwards and not for any particular Bill of Entry. Even, the order dt. 9.8.1996 finalizing the provisional assessments also refers to Ex-bond Bill of Entry No. 5 dt. 16.5.1995 and subsequent Bill of Entries. Therefore, it would be reasonable to conclude that the Bills of Entry for the perio .....

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that the letter dt. 28.3.1997 was not received by the department. Therefore, since the department did not challenge the Commissioner (Appeals) order, the refund for this period is not time barred. The contention of the appellant is also that the Bombay High Court order dt. 5.5.1997 setting aside the order of finalization dt. 9.8.1996 restores the status of provisional assessment in respect of all Bills of Entry filed upto the date of the High Court order and till the conclusion of the fresh adju .....

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ional assessments before 13.7.2006 when sub-section(5) to Section 18 was introduced. Sub-Section 18(5) brought the concept of unjust enrichment into Section 18. We have seen these judgments. In the case of Hindustan Zinc Ltd. (supra) the Larger Bench had considered the judgment of the Honble Supreme Court in Allied Photographic case 2004 (166) ELT 3 (S.C.) and came to the conclusion that unjust enrichment is not applicable to refunds arising out of finalization of provisional assessments prior t .....

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at the issue is dealt in detail in the Mumbai High Court judgement in the case of Bussa Overseas (supra). The Honble High Court removed the confusion prevailing in the matter by distinguishing the provisions of the Customs Act and the Central Excise Act and held that unlike the Central Excise Act, Section 27 of the Customs Act has always been made applicable to the refunds arising under Section 18 which deals with refunds arising from finalization of provisional assessments. And therefore the te .....

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ticides Pvt. Ltd. (supra) and S.R.F. Limited (supra) conclusively establish that all claims of refund under the Customs Act must pass the test of unjust enrichmentcontained in Section 27 of the Act and unless it is established that the duty element has not been passed on to others, no refund can be granted. In the light of the above dictum laid down by the Apex Court, it is not open to the Petitionersto contend that in respect of the refund arising under Section 18 of the Customs Act, the princi .....

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y merit because, from a bare perusal of Section 18 of the Customs Act it is seen that no such obligation is cast upon the Customs authorities. Section 18 merely entitles the assessee to get refund if the duty finally determined in less than the duty paid provisionally. Moreover, Section 18 cannot be read in isolation. It has to be read with Section 27 of the Customs Act. Explanation II to Section 27 of the Customs Act (Explanation 1 prior to 1-8-1998) provides that to obtain refund of any duty p .....

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case before the expiry of six months from the date of adjustment of duty after the final assessment. In other words, the refund of duty arising on finalisation of the provisional assessment is governed by the limitation prescribed under Section 27 of the Customs Act. Therefore, even though the Petitioners are entitled to the refund on finalisation of the assessment under Section 18, to obtain that refund, the Petitioners are required to make an application within the period of limitation prescr .....

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hat all refund claims except in the case of unconstitutional levy must be filed and adjudicated under Section 27 of the Customs Act. Later on it is held by the Apex Court that even the unconstitutional levy is governed by the principles of unjust enrichment. Therefore, the contention of the Petitioners that Section 27 does not apply to refund due under Section 18 and the Customs authorities are obliged to refund the amount due under Section 18 without the application of Section 27 cannot be acce .....

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. Relying upon the above observation it was contended that the principles of unjust enrichment contained in Section 27 are not applicable to the refund arising under Section 18 of the Customs Act. This contention of the Petitioners is totally misconceived. Although Section 18 of the Customs Act is substantially similar to Rule 9B of Central Excise Rules, there was material difference between the two Acts at the relevant time. It must be remembered that the Apex Court in the case of Mafatlal Indu .....

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the Customs Act are not applicable. There is a sound reason behind it. Under the Customs Act, since inception, the recoveries or refund arising on finalisation of the provisional assessment have been expressly subjected to the limitation prescribed under Section 27 of the Customs Act. Initially Explanation I to Section 27 provided for the limitation to claim refund of duty provisionally assessed under Section 18 of the Customs Act. By Act 21 of 1998 (with effect from 1-8-1998), the Explanation .....

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ssment will be subject to the limitation prescribed under Section 11B of the Excise Act. That explanation to Section 11(B)(1) was omitted by Act 44 of 1980. As a result, the procedure prescribed under Section 11B was not applicable to the refunds arising on finalisation of the provisional assessments. In view of this lacuna, the Apex Court in the case of Mafatlal Industries (supra) held that the recoveries or refund arising on finalisation of provisional assessment under Rule 9B are not governed .....

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esult of these amendments, the refunds arising on finalisation of provisional assessment under Rule 9B is subjected to the procedure established under Section 11B(2) of the Centra1 Excise Act. The amended provisions of Rule 9B has been recently considered by the Apex Court in the case of Commissioner of Central Excise v. T.V.S. Suzuki Ltd. reported in 2003 (156) E.L.T. 161 (S.C.) and it is held by the Apex Court that the refund claims arising under Rule 9B prior to 25-6-1999 will not be governed .....

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ined under the Customs Act. Therefore, the contention of the Petitioners that in view of the judgment of the Apex Court in the case of Mafatlal Industries (supra), the refund arising under Section 18 of the Customs Act cannot be subjected to the provisions of Section 27 of the Customs Act, cannot be accepted. Since refunds arising under Section 18 of the Customs Act has been expressly subjected to the procedure prescribed in Section 27 of the Customs Act, it is not open to the Petitioners to con .....

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Customs authorities. The decision of the Tribunal is based on total misreading of the law laid down by the Apex Court in the case of Mafatlal Industries. As stated hereinabove, the ratio laid down by the Apex Court in Mafatlal Industries (supra) is that in respect of refunds arising under Rule 9B(5), the provisions of Section 11B of the Central Excise Act are not applicable. That was the position in law under the Central Excise Act at the relevant time. But, that was not the position under the C .....

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n 27 of the Customs Act, is totally incorrect and contrary to law. And this Mumbai High Court judgement in the case of Bussa Overseas(supra) has been affirmed by the Honble Supreme Court 2004(164)ELT A177(SC). Although it is argued that dismissal of SLP by the SC in the case of Bussa Overseas does not result in merger of the Tribunals Order, we find that the Allied Photographics ( supra) judgement was delivered in the context of Central Excise and therefore the situation was different in that ca .....

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