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2017 (7) TMI 551 - MADRAS HIGH COURT

2017 (7) TMI 551 - MADRAS HIGH COURT - TMI - Refund claim - Was the petitioner entitled in law, to straight away seek refund of duty without having the assessment order modified or revised? - Held that: - In case, the duty qua the goods was re-assessed, and such re-assessment was not accepted in writing by the importer, or the exporter, the proper Officer under sub-section (5) of Section 17 of the Act, is required to pass a speaking order within fifteen (15) days from the date of re-assessment o .....

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to the conclusion that the self-assessment is not done correctly, he is now empowered to re-assess the duty leviable on such goods. In case, the re-assessment, as carried out by the Proper Officer, whether with regard to valuation of goods, or classification, or examination, or concession of duty availed of, consequent to any notification, is different to what had been done via self-assessment procedure and the same is not accepted by the importer or the exporter, he is required to pass a speaki .....

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to pass a speaking order, nothing further need to be said on this aspect. However, in the instant appeal, I must also deal with the stand taken by the respondents that no protest was lodged with it, as per the protest record maintained by the Department. - Once, an application for refund is filed, it is incumbent on the authority concerned to pass an order under sub-section (2) of Section 27 of the Act, to determine whether whole or part of the duty and interest, if any, paid on such duty, .....

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at there was no order on record modifying or reviewing the rate of duty determined via the self-assessment mode. This conclusion of the second respondent, in view of what is stated above, is, clearly, wrong - the impugned order, in my view, is flawed in the eyes of law, even on this score. This is more so, in view of the fact that in the refund applications against the column, which requires the applicant to state whether or not personal hearing is required, the petitioner had indicated in no un .....

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ons filed by the appellant, qua various amounts, on the ground that they were premature. 1.2. The reason furnished in the impugned order for coming to such a conclusion is pivoted on the second respondent's appreciation of the ratio of the judgement in the matter of : Priya Blue Industries Vs. Commissioner of Customs, 2004 (172) ELT 145 (SC). Thus, according to the second respondent, in substance, the case for refund would arise, only, if, clearance made via self-assessment procedure, which .....

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ort 'BEs') were filed. 2.2. The petitioner claims that at the relevant point in time, i.e., at the time of clearance of the said goods, it was not granted the benefit of concessional rate of duty. The petitioner, evidently, had been paying duty at the rate of 13.5% [comprising of 0% Basic Customs Duty (BCD), 13.5% Countervailing Duty (CVD) {including 1% National Calamity Contingent Duty(NCCD)}, 0% Education Cess, 0% Higher Secondary Education Cess and 0% Special Additional Duty(SAD)]. 2. .....

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015 - as its case came within the purview of Entry 263A of the said notification. 2.4. For the sake of convenience, the relevant part of the said notification is extracted hereafter : Sl. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No. 263A 8517 i) Mobile handsets including cellular phones ii) Mobile handsets including cellular phones 12.5% 1% 16 2.5. A perusal of the notification would show that the mobile phones are l .....

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nience, condition No.16 is extracted hereafter : "16. If no credit under rule 3 or 13 of the CENVAT Credit Rules, 2004, has been taken in respect of the inputs or capital goods used in the manufacture of these goods." 2.7. It appears that, because of the Circular No.37/2001-Cus, dated 18.06.2001, issued by the Central Board of Excise and Customs and the view taken by the Central Excise, Gold and Appellate Tribunal, Larger Bench, in the matter of : Puyesh Chemicals and Metals V. Commiss .....

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ith effect from 01.03.2015. 2.9. According to the petitioner, this position changed after the Supreme Court rendered its judgement in the matter of : SRF Industries Vs. Commissioner of Customs, Chennai, 2015 (318) ELT 607 (SC). Via the said judgement, in effect, the Supreme Court ruled that SRF Industries, which was an importer of goods, was entitled to the benefit of the said exemption notification, which contained condition No.20, which was similar to condition No.16 obtaining in Notification .....

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een April and July 2015. These refund claims pertained to 233 BEs. The details, with regard to the refund claims, are, for the sake of convenience, set out hereinbelow : Sl. No. Period No.of Bes Refund Application No. Amount (in Rs.) 1 April 2015 18 S25A/Gen/81/2015 (Refunds-Air) 1,22,33,346.72 2 May 2015 107 S25A/Gen/74/2015 (Refunds-Air) 5,36,33,733.11 3 June 2015 88 S25A/Gen/76/2015 (Refunds-Air) 5,84,10,536.14 4 July 2015 20 S25A/Gen/75/2015 (Refunds-Air) 1,63,54,316.52 Total 233 14,06,31,93 .....

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en taken by the petitioner, the respondents vide impugned order dated 23.11.2015, returned the refund applications. 4. Being aggrieved, the petitioner has approached this Court via the instant writ petition. Submissions of Counsels 5. In support of the writ petition, arguments were advanced by Mr.Tarun Gulati, Advocate, while, on behalf of the respondents, submissions have been made by Mr.A.P.Srinivas, Advocate. 6. The submissions of Mr.Gulati, can, broadly, be paraphrased as follows : 6.1. The .....

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ce, the words "in pursuance of an order of assessment ..." had been deleted, after the amendment in 2011, there was no requirement to lay challenge to the assessment order, if, it could be called an ''order'' as understood in law. (ii) According to the learned counsel for the petitioner, the petitioner was, thus, entitled to register a claim for refund of duty under the amended Section 27 of the Act, once, it was shown that duty had been paid by it or, borne by it. (iii .....

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a specific demand that a personal hearing be granted to the petitioner in terms of the provision made, in that behalf, in the refund application, the impugned order was passed without affording any opportunity of hearing to the petitioner. The impugned order, thus, violated the principles of natural justice, and would, consequently, have to be set aside on this short ground alone. 6.4. Since, the BEs had to be filed via an electronic mode, the petitioner had no opportunity to avail of the benef .....

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nder the amended provisions of Section 17, the importer is required to self-assess the goods, as regards classification, value, rate of duty and, whether or not, it is entitled to the benefit of a concession notification. (i) In so far the customs authorities are concerned, verification with regard to the aforesaid aspects has been made optional. In case, the customs authorities have doubts with regard to the aforesaid aspects, they may subject the goods to the self-assessment, examination and t .....

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e taken under the Act. (iii) Under Sub-section (5) of Section 17, if the importer does not accept in writing the re-assessment carried out by the proper officer, the said officer would, necessarily, have to pass a speaking order, qua the re-assessment done, within a period of fifteen (15) days commencing from the date of re-assessment of the BE. In other words, according to the learned counsel for the petitioner, the proper Officer, i.e., concerned Customs Authority, had the discretion as to whe .....

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e duty had been either paid or borne by him. 6.7. It was, thus, contended that there was no requirement in law, to first challenge the assessment order, if, it can be called one, and to claim a refund, only, if, it was reviewed or modified in appeal. 6.8. In support of his submissions, learned counsel for the petitioner relied upon the following judgments and/or orders : (i) Aman Medical Products Ltd. V. Commissioner of Customs, Delhi, 2010 (250) ELT 30 ; (ii) Suryalaxmi Cotton Mills V. Commissi .....

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(Tri.-Chennai); (viii) Jindal Vijayanagar Steels Ltd. V. Commissioner of Customs, Mangalore, 2008 (11) STR 109 (Tri.-Bang.); (ix) Manipal Media Network Ltd. V. Commissioner of Customs, Cochin, 2009 (234) ELT 647 (Tri. - Bang.); (x) Orxy Fisheries Private Limited V. Union of India, 2011 (266) ELT 422 (SC); (xi) Union of India V. Real Slotted Angles Company, 2010 (252) ELT 329 (Bom.); (xii) Zuari Agro Chemical Ltd. V. Union of India, 2014 (207) ELT 874 (Bom.); (xiii) Commissioner of Central Excise .....

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.6750 of 2016, titled : Yu Televentures Private Limited V. Union of India and Others; (xviii) Common Order of the Calcultta High Court dated 20.07.2016, in a batch of writ petitions and the lead writ petition being : W.P.Nos.473 of 2016, titled : SGS Marketing Vs. Union of India and Others; (xix) Judgement of the Delhi High Court dated 05.09.2016, in W.P.(C)No.7851 of 2016, titled : Vishal Video and Appliances Private Limited V. Union of India and Others; (xx) Judgement of the Delhi High Court d .....

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egulation 3 of Customs Refund Application (Form) Regulations, 1995 (in short "1995 Regulations"), which was brought into force, via the following Notification : M.F. (D.R.) Notification No.34/95-Cus.(NT), dated 26.05.1995. Based on the aforesaid, learned counsel says that the second respondent was entitled to return the refund applications, as they were deficient and incomplete. 7.2. It was further contended by the learned counsel that in order to claim refund, the petitioner had to es .....

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d that, duty was paid under protest, it could have asked for issuance of a speaking order under Section 17(5) of the Act. In support of this contention, learned counsel submitted that the petitioner had self-assessed the rate of CVD and this rate having been accepted by the proper Officer, there was, in fact, no lis obtaining between the petitioner and the Department, which was exemplified by the fact that as per the 'protest record' maintained by the Department, no protest stood registe .....

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for refund had been returned, not only on the ground that they were premature, but also on account of the fact that the refund section had no jurisdiction to process the same. 7.6.To be noted, the said letter, however, has not been placed on record by the respondents. 7.7. Notwithstanding the above, learned counsel submitted that, since, the refund applications were merely returned on the ground that they were premature, and filed before an authority, which did not have the necessary jurisdictio .....

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ared consignments of mobile phones imported by it between April and July 2015, qua which, it had paid CVD at the rate of 13.5% (inclusive of 1% NCCD). 9.2. With the Supreme Court rendering its judgement in the matter of : SRF Industries V. Commissioner of Customs, Chennai, 2015 (318) ELT 607 (SC), on 26.03.2015, the petitioner lodged its protest vide letters dated 22.04.2015, 30.04.2015, 16.06.2015 and 19.06.2015. In sum, via these letters, the petitioner claimed the benefit of Notification No.1 .....

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the refund applications could not have been processed. For this purpose, the second respondent placed reliance on the judgement of the Supreme Court in Priya Blue Industries case. 10. Therefore, given these facts, the issue, which arises for consideration, is, as to whether the claims made by the petitioner between April 2015 and July 2015 were tenable. In other words, was the petitioner entitled in law, to straight away seek refund of duty without having the assessment order modified or revise .....

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ter had entered any goods under Section 46 or 50 of the Act respectively, the said goods were required to be examined and tested by the Proper Officer without undue delay under sub-section (1) of the very same Section. 11.2. Based on such examination and testing, the duty, if any, leviable on such goods, would be assessed, save and except, as otherwise provided under Section 85 of the Act. 11.3. The proper Officer, in carrying out the exercise of assessing duty was empowered under sub-section (3 .....

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of the goods. 11.5. Under sub-section (5) of Section 17, if, the importer or the exporter were to accept the re-assessment made, which was contrary to the assessment made by the importer or the exporter, in writing, then, the matter ended at that stage. However, if, the said position did not obtain, the proper Officer was required to pass a speaking order within fifteen (15) days from the date of assessment of the BE, or the shipping bill, as the case may be. 12. Under unamended Section 27 of t .....

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essment, inter alia, included self-assessment. 12.2. The provisions of Section 2 of the Act post amendment read as follows : 2. Definitions - In this Act, unless the context otherwise requires - (2) "assessment" includes provisional assessment, self-assessment, re-assessment and any assessment in which the duty assessed is nil." 12.3. Furthermore, in so far as Section 17 of the Act was concerned, the scheme of assessment of duty was changed from a system of examination and testing .....

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per Officer, he could examine and/or test the goods, or any part thereof, as was found necessary. 12.5. Like in the unamended section, where verification was carried out, the Proper Officer under sub-section (3) of Section 17 was given the power to require the importer or the exporter, or any other person, to produce documents and/or information referred to therein. 12.6. Similarly, under sub-section (4) of Section 17, after the verification, examination or testing of goods, if, the Proper Offic .....

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shipping bill, as the case may be. 12.8. Furthermore, sub-section (6) of Section 17, authorizes the Proper Officer to audit the assessment of duty of imported goods or goods sought to be exported, at his office, or, at the premises of the importer or the exporter, as may be considered expedient, in cases, where, either re-assessment had not been done or a speaking order had not been passed on re-assessment. 12.9. In so far as amended Section 27 of the Act is concerned, any person could claim re .....

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lf-assessment of the duty leviable qua the goods in issue. 13.1. The new regime, which was brought into play after the amendment, gives an option to the Proper Officer to choose from the cases involving self-assessment, those, which he would want to subject to verification, examination or testing. 13.2. Resultantly, if, upon verification, examination or testing, the Proper Officer comes to the conclusion that the self-assessment is not done correctly, he is now empowered to re-assess the duty le .....

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n where self-assessment constitutes an order, if regard is had to the amended provisions of Section 17 read with Section 2(2) of the Act, which, includes within the definition of the term assessment, self-assessment. 14. Having said so, the difficulty, which arises and one which cannot be overlooked, is that, BE or the Shipping Bill, as the case may be, is required to be uploaded in an electronic form, unless special permission is given by the concerned authority to file the said documents in a .....

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this particular case, as is evident from the narration of facts set out above, protests were lodged by the petitioner, both via letters, as well as by making a reference qua the same in the applications for refund. 15. The question, therefore, is, that upon, such protests being lodged, is the Proper Officer not made aware of the fact that the clearance of goods made, by paying duties at the rate demanded by the customs authorities, is accompanied by a caveat. 16. The next question, which, arises .....

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ich, I have delivered the judgment dated 18.04.2017, the customs authorities had taken the stand that notwithstanding the lodgment of protest, since, the clearance made by an importer in that case led to emergence of a self-assessment order, a refund claim could be processed only, if, firstly, an appeal was preferred qua the same to the Commissioner of Appeals under Section 128 of the Act, and secondly, an order was obtained, which either reviewed or modified the assessment Order. 17.2. In this .....

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ich is dated 03.06.2016, in which, except for a few stray sentences, the stand taken is identical to the extent that even paragraph numbers are the same. In so far as the assertions made in paragraph 40 are concerned, the following has been averred: "40. ..... Had the petitioner believed that he was eligible for the exemption he is claiming now, he could have filed his Bills of Entry accordingly and registered his protest and got a speaking order in terms of Section 17(5) of the Act. .....& .....

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issued for passing a speaking order. 17.6. I had found the stance taken by the respondents unsustainable in Ingrams Micro India Private Limited case (cited supra), for the reason, that once, a protest is lodged, the Proper Officer is made aware of the fact that the clearance of goods at the rate of duty demanded by the customs authorities is being done with a caveat, and therefore, he is bound to verify, examine and test the goods, and pass a speaking order. 18. I have also held that unless a sp .....

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said on this aspect. However, in the instant appeal, I must also deal with the stand taken by the respondents that no protest was lodged with it, as per the protest record maintained by the Department. 18.2.To be noted, along with the writ petition, a typed set of documents were filed on 25.01.2016, wherein, a specific reference was given by the petitioner to four (4) letters dated 22.04.2015, 30.04.2015, 16.06.2015 and 19.06.2015, whereby, apparently, protest was lodged with the Deputy Commissi .....

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ntioned four (4) letters in paragraph 16 of its rejoinder. The respondents have chosen not to file a sur-rejoinder. 18.4. This apart, in the applications for refund, quite clearly, the petitioner has taken the stance that the excise duty was paid under protest. Therefore, to my mind, what emerges is that, what the respondents seek to deftly portray is the fact that the lodgment of refund claim was not in accordance with the procedure contained in facility circular No.5 of 2008. 18.5. In my view, .....

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dents incumbent upon the Proper Officer to pass a speaking order under Section 17(5) of the Act, on merits, for whatever it was worth, as to why the petitioner was not entitled to the benefit of concessional rate of CVD. 18.6. The facts in the instant case show that the respondents chose to deal with the protest lodged by the petitioner, by taking a more convenient route, which is, to return the applications lodged for seeking refund. 19. The question, therefore, which, arises for consideration .....

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anced on behalf of the petitioner is that once, self-assessment is made under the amended provisions of Section 17, which is not subjected to verification by the proper Officer, the importer or exporter is entitled to, immediately, file for refund, without having to lay a challenge to the assessment order, by way of an appeal, as long as duty has been paid or borne by such a person. 19.2. In support of this contention, reliance was placed by the learned counsel for the petitioner on the judgment .....

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sion Bench prior to the passing of the Finance Act, 2011. In that case, the Division Bench took the view that under the unamended provisions of Section 27 of the Act, an importer could seek refund of duty, even though the assessment order had not been assailed in appeal, as long duty was borne by him. 19.4. The rationale given was that, at the time, when, the goods were cleared based on the assessment order passed under the unamended provision of Section 17 of the Act, the importer was not aware .....

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27(1)(ii) on the ground that it had been borne by him. 19.5. The Division Bench, thus, held that importers refund claim was maintainable under Section 27 of the Act, even though, no appeal had been filed on the ground that its claim fell under clause (ii) of sub-section (1) of Section 27 of the unamended Act. The Division Bench, while coming to this conclusion in Aman Medical Products Limited case, distinguished the judgements of the Supreme Court rendered in Priya Blue Industries Ltd. case, o .....

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14 of the judgement : "12. An important change that has been made is that a person can now claim refund of any duty or interest as long as such duty or interest was paid or borne by such person. The conditionality of such payment having been made pursuant to an order of assessment does not exist. Secondly, once an application is made under Section 27(1) of the Act, it is incumbent on the authority concerned to make an order under Section 27(2) determining if any duty or interest as claimed .....

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ion for refund is made in the requisite manner and form as prescribed, it is incumbent on the authority to deal with such an application. Where there is an assessment order, the authority will take it into account in deciding the application for refund. If such assessment order has been reviewed or modified in appeal such further order will obviously be taken into account. In other words, under Section 27 of the Act, as it now stands, it is not open to an authority to refuse to consider the appl .....

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8th April 2011, particularly if such duty has not been paid under protest. In any event, after 8th April 2011, as noticed hereinbefore, as long as customs duty or interest has been paid or borne by a person, a claim for refund made by such person under Section 27(1) of the Act as it now stands, will have to be entertained and an order passed thereon by the authority concerned even where an order of assessment may not have reviewed or modified in appeal. 14. The Assistant Commissioner (Refund), .....

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sons, plainly erroneous." (emphasis is mine) 19.8. A perusal of the same would show that, once, an application for refund is filed, it is incumbent on the authority concerned to pass an order under sub-section (2) of Section 27 of the Act, to determine whether whole or part of the duty and interest, if any, paid on such duty, by the applicant is refundable. The refund of duty or interest, if any, paid, is to be made to the applicant, if, it fulfills, the conditions set out in Section 27(2) .....

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er, in fact, has a second string to its bow, and thus, the concerned authority was required to pass an order on the refund applications, even if, it is assumed, for the moment, that no protests were lodged or the protest lodged did not accord with the provisions of Circular No.5/2008. 22. I may also indicate herein that the petitioner, in support of its aforesaid submission, has relied upon a series of other orders, to which, I have made a reference above, during my narration, which only follow .....

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V. Ace Designers, (2015) 329 ELT 109 (Mad). As correctly pointed out by the learned counsel for the petitioner, this judgement also dealt with the provisions of Sections 17 and 27 of the Act, which stood on the statute prior to the 2011 amendment. 24. The record would, thus, show that the second respondent has not passed any order on merits in respect of the refund applications. The second respondent has, merely, returned the refund applications by wrongly appreciating the ratio of the decision .....

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