TMI Blog2008 (9) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... against the order of the Commissioner (Appeals) No. 41/2004(37-JMN) Cus/Commr (A)/AHD dated 27-1-2004. Cross-objection No. C/CO-380/04 is connected to the above appeal. Cross-objection is basically in the nature of submissions supporting the order of the Commissioner (Appeals). 2. None appears for the appellant. Heard ld. DR. 3. The relevant facts, in brief, are as follows :- (a) The appellant imported an old vessel for the purpose of ship breaking in November, 1997 based on MOA dated 5-11-1997 and sought reduction in price declared on the basis of an amendment due to difference in the description of main engine and generator than those shown in the original MOA. The bill of entry was provision ally assessed on execution of bond with bank guarantee for the entire disputed amount of Rs. 7,29,709/ (b) The provisional assessment was finalized by the Superintendent by his order dated 28-5-1998 adopting the original higher price and holding that the differential duty of Rs. 7,29,709/- was payable. In pursuance of the said order of finalization of provisional assessment, the bank guarantee already given was en-cashed and credited to the Government account. (c) The party fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank guarantee has been furnished in the context of provisional assessment. The bank guarantee has been encashed subsequent to final order dated 28-5-1998 issued by the Original Authority. After encashment of the bank guarantee, the amount has been credited to the Government account in pursuance of order of the Original Authority. After encashment, it ceases to be a bank guarantee as the banker has already paid the dues as per the guarantee they have given to the Department. This is not a case where bank guarantee in lieu of pre-deposit was ordered by an appellate authority or a court to safeguard the disputed revenue. 6.2 While the appellant has filed an appeal against the final assessment order dated 28-5-1998, it has not been shown that they have also preferred a refund claim within the limit prescribed after finalization and recovery of the amount. The order of the appellate authority dated 2-12-1999 decided the disputed assessment in favour of the applicant. The order of the Commissioner (Appeals) does not sanction the refund as such. 6.3 The refund claim has been filed only on 31-7-2000 based on a favourable order in the assessment dispute. The refund claimed was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inasmuch as the order-in-original confirmed the demand against the assessee and there was no occasion for the assessee to file any refund claim after finalization by the original adjudicating authority, unless the said order is set aside by the higher appellate forum. It is not a case of refund of the duty, requiring making any formal application in which case, the question of time limit would arise. On success of the appeal, the assessee is entitled to refund of the amount deposited as a condition of hearing of his appeal. As such, I am of the view that neither time limit nor unjust enrichment would apply in the present case. 10. It is also on record, as observed by the learned Member (Technical) that the appellant, out of total amount of Rs. 7,29,709/- have availed modvat credit of amount of Rs. 4,64,347/-. I find that the appellant is not claiming refund of the entire amount of Rs. 7,29,709/-, but the refund claim is only of Rs. 2,77,151/-, as is clear from Form CA-3 of the appeal. 11. In view of my above discussion, I set aside the impugned order and allow the appeal with consequential relief to the appellant. Sd/- (Archana Wadhwa) Member (J) Dated 13- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls), who by order dated 2-12-1999 accepted the appellant's case and allowed the appeal. The appellant thereafter filed refund claim on 31-7-2000. By order dated 15-2-2001, the Deputy Commissioner rejected the refund claim holding the same to be time barred. He also held that even if the claim was not time-barred, the appellant had failed to establish that the duty burden had not been passed onto the customers and they had not unjustly enriched themselves, and therefore, refund could not be allowed. The Deputy Commissioner noticed that the appellant had availed modvat credit to the tune of Rs. 4,54,347/- out of the total of Rs. 7,29,709/- being the subject matter of refund claim. In these premises, the refund claim was rejected as not at all permissible. On appeal by the appellant, the Commissioner (Appeals) by order dated 27-1-2004/3-12-2004 did not go into the question of unjust enrichment. However, agreeing with the Deputy Commissioner, he held that the refund claim was time-barred and accordingly dismissed the appeal. 15. The appellant has come to the Tribunal in the present appeal challenging the correctness of the said orders of the Deputy Commissioner and Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority or a Court to safeguard the disputed revenue. 6.3 Refund claim has been filed only on 31-7-2000 based on a favourable order in the assessment dispute It is also not disputed that the amount claimed as refund by the appellant included an amount of Rs. 4,54,347/-, which they have taken as modvat credit. On this ground also, it would not be appropriate to hold that the refund claim has arisen directly out of the order of the appellate authority on 2-12-1999. 6.4...... claim has been filed after time limit prescribed for filing the refund, having taken and unutilized substantial portion of the disputed duty as credit we also hold that they have not discharged the burden of proving that duty burden has not been passed on." 18. On the above findings, the learned Member (Judicial) proposed that appeal be allowed while the learned Member (Technical) proposed that the appeal be rejected. 19. Section 18 of the Customs Act which deals with provisional assessment of duty may be quoted in extenso as under: 18. Provisional assessment of duty: (1) Notwithstanding anything contained in this Act but without prejudice to the provisions contained in section 4- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the duty provisionally assessed, that is, discharge of the duty liability. This is clear from the words 'shall be adjusted against the duty finally assessed" in clause (a) of sub-section (2). Furnishing of security in the shape of bank guarantee, or otherwise, has therefore to be treated as payment of duty in anticipation of the finalization of the duty liability, and the same cannot be regarded as pre-deposit within the meaning of Section 129E of the Customs Act. Under Section 129E, the appellant is required to deposit the amount of duty along with interest and penalty if he in tends to appeal against the decision of the lower authority subject to waiver of the requirement of to pre-deposit by the appellate authority, that is, Commissioner (Appeals) or the Appellate Tribunal, as case may be. The provisions of Section 129E are independent provisions designed to secure the interest of revenue. Where the duty assessed or penalty imposed already stands paid, there may not be any occasion to seek waiver of pre-deposit. The amount can be treated as 'pre-deposit' within the meaning of Section 129E when the dues remaining out standing by way of duty and/or interest or penalty are de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the mechanism of determining the provisional assessment of duty. What is determined on provisional assessment is the provisional, duty payable on the imported goods. On final assessment, if the duty determined is less than the duty provisionally paid, then the differencial amount of duty is liable to be refunded. Therefore, the words 'amount so paid' in Section 18(2)(a) are referrable to the amount of duty paid on provisional assessment. It cannot be said that because the words 'amount so paid' is used in Section 18(2)(a), payment made provisionally is not payment of provisional duty. The heading of Section 18 of Customs Act itself is 'provisional assessment of duty. Moreover, Section 18(1) expressly uses the words 'duty provisionally assessed'. Therefore, what is assessed provisionally under Section 18 is the duty and the imported goods are cleared for home consumption under Section 47 of the Customs Act only on payment of duty, whether assessed provisionally or finally. In either case, the amount paid is duty. If, on final assessment, the duty paid provisionally is found to be more then, the differential amount become refundable, subject to the limitation prescribed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for refund must be made within the period of limitation prescribed therein. The limitation prescribed under Section 27 of the Customs Act requiring filing of an application for refund of duty arising on finalisafion of the provisional assessment in the case of import made by any individual for his personal use or by Government or by any educational research or charitable institution or hospital, is, before the expiry of one year and in any other 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 prescribed under Section 27 of the Customs Act. That is the scheme of the Customs Act. If the Customs authorities were under an obligation to refund the amount due under Section 18 of the Act then the Explanation II to Section 27 becomes redundant or nug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him contrary to law. The power of the court is not meant to be exercised for unjustly enriching a person". The Supreme Court held that all claim for refund must be filed and adjudicated under Section 27 of the Customs Act. Two exceptions were however pointed out, namely, refund of unconstitutional levy and, second, goods used in captive consumption. However, in UOI v. Solar Pesticides Ltd. - 2000 (116) E.L.T. 401 (S.C.), the Supreme Court held that even in respect of duty paid on raw materials imported and captively consumed in the manufacture of finished goods, the refund can be allowed only when the incidence of duty is not passed on the purchaser of the finished goods. Similarly, in SRF Ltd. v. Assistant Collector of C.Ex., Trichi - 2001 (134) E.L.T. 324, it was held that even in case of unconstitutional levy, the assessee would not be entitled to refund unless they establish that the duty burden has not been passed onto others. 26. These decisions thus, conclusively establish that the claim of refund under the Customs Act must stand the test of 'unjust enrichment' contained in Section 27 of the Act which obliges the claimant to establish that duty element had no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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