9911796707
TMI Blog2023 (12) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... health, nutrition and beauty products and had imported inter-alia, dietary supplements by classifying it under Customs Tariff Heading (CTH) 21.06 and paid applicable duties of Customs. In an dispute regarding payment of additional duties of Customs (CVD) upon availing concessional duty applicable vide entry at Sl. No.10(i) of notification No.02/2011-Central Excise dated 01.03.2011, the respondent importerhad claimed concessional CVD of 5%forthe imported dietary supplements as "Ready to Eat Packaged Food". Disputing such a claim, the department had denied the benefit of concessional CVD by initiating show cause proceedings demanding merit rate of CVD at 10%/12%, in a separate litigation, which had attained finality at the level of appellate proceedings held before the Commissioner of Customs (Appeals). As the respondent importer had initially paid the higher amount of CVD at merit rate, they had filed refund application with the department claiming refund of CVD paid over and above the concessional rate of CVD. Upon finalisation of provisional assessments in respect of such imports, the department had paid refunds to the respondent importer by sanctioning refund of Rs.3,83,54,263/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.006769 dated 13.06.2011 for ascertaining the valuation of the imported goods in terms of the provisions of Section 14 of the Customs Act, 1962 read with the rules made thereunder, by assessing the imported goods under provisional assessment of duty under Section 18 ibid. Further, the importer was also asked to submit various documents along with requisite details in terms of the questionnaire prescribed by CBEC circular No.11/2011-Cus. dated 23.02.2011. In reply to the said questionnaire the importer had submitted vide their letter dated 27.06.2011, a number of documents including Trademark and Marketing Agreement; Management Service Agreement; Purchase, Warehouse and Distribution agreement dated 15.02.2011 and stated that one of the non-resident director in the importer's company is also an executive in the supplier's company. After examining the documents submitted by the importer, the Deputy Commissioner of Customs, GATT Cell, Mumbai vide Order-in-Original No. 630/DC/SVB/AK/2012-13 dated 13.09.2012 (SVB Order), had determined that the transactions between the importer and the supplier M/s. Aloe Vera of America Inc. USA are related in terms of Rule 2(2) of Customs Valuation ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents classified under CTH 2106 9099, the importers have claimed the benefit of concessional additional duties of customs (CVD) under Sl. No.10(i) notification No.02/2011-Central Excise dated 01.03.2011 applicable to "Ready to eat packaged food". The Department interpreted that dietary supplements cannot be considered as food and does not fall in the category of ready to eat packaged food, thus initiated SIIB investigation which culminated into issue of show cause proceedings vide SCN dated 28.08.2012, which was adjudicated by an order dated 28.03.2013, denying the benefit of exemption vide Sl. No.10(i) of notification No.02/2011-C.E. dated 01.03.2011. On the above basis, an Order-in-assessment dated 29.03.2013 was issued denying the concessional CVD in the aforesaid notification. Being aggrieved with the both the above orders, the importer had filed an appeal before the Commissioner of Customs (Appeals), who after examining the legal provisions under the Food Safety and Standards Act, 2006, had passed an order holding that the imported goods of description 'dietary supplements' is "food" in terms of the definition given under clause (i) of Section 3 ibid. Accordingly, both the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B/Es viz., 9338974 & 9338978 both dated 18.02.2013 due to some technical problem in the system, reassessment could not be completed. Later, the next AC, Group-I vide letter dated 27.03.2018 had re-assessed finally this remaining 2 B/Es viz., 9338974 & 9338978 both dated 18.02.2013. On the basis of the above facts, and after examining requisite compliances under Section 27 ibid, the DC, CRARS section had sanctioned the refund of Rs.3,83,54,263/- and Rs. 50,97,056/- vide order dated 05.10.2016 and order dated 30.05.2018, respectively. The aforesaid refund was also received by the importer on 17.10.2016 and 05.06.2018, respectively. As the importer's claim for interest on delayed payment of refund had not been considered in the aforesaid 2 orders, they had taken up the matter with AC, CRARS section and subsequently in appeal before the Commissioner of Customs (Appeals), whose order has been appealed by the department in the present appeal before us. 3.1 Learned Advocate appearing for the appellants had submitted that the respondent importer's claim for interest on delayed refund is governed under Section 27A of the Customs Act, 1962 and not under Section 18 ibid, because on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined earlier. 8. 15.01.2015 Order passed by original authority i.e., Assistant Commissioner of Customs, Appraising Group-I for assessment of goods, holding that the imported goods are 'ready to eat packaged food' and are thus eligible for concessional CVD. 9. 08.04.2014 Respondent importer submitted refund claim of excess CVD paid for imports undertaken in period-II (16 B/Es) and period-III (14 B/Es) amounting to Rs.4,34,51,319/- (though the refund application mentioned 31 B/Es, as 1 B/E is pertaining to JNCH, it does not form part of the present proceedings) 10. 25.03.2016 & 30.03.2016 Respondent importer re-submitted documents pertaining to the refund claim as the Department could not trace the original file 11. 02.05.2016 Representation for re-assessment of B/Es in accordance with the principle laid down by the Commissioner of Customs (Appeals) in his order dt.09.10.2014 12. 17.06.2014 Respondent importer requested the Assessing Group for finalisation of 30 B/Es. 13. 05.10.2016 Refund of Rs.3,83,54,263/- in respect of 28 B/Es was sanctioned 14. 17.10.2016 Amount of refund Rs.3,83,54,263/- was received by the respondent importer 15. 30.05.2018 Refund of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the respondent in 2016 seeking "finalization" of assessments were letters requesting for reassessment to reflect the benefit of exemption notification No. 2/2011-C.E. He also stated that when the refund application was filed on 08.04.2014, all 30 B/Es concerned had already been finally assessed. The letters filed by the Respondent in 2016 merely sought the reassessment of the B/Es to reflect the benefit of exemption Notification No. 2/2001-C.E., so that refund is granted at the earliest. These letters cannot be relied upon to state that assessments were provisional when the refund application was filed. 3.4 He also stated that as evident from the Copies of the B/Es, the assessments were either final at the time of import itself, or were finalized on 10.05.2013. Once the B/Es are finalized, the same cannot be finalized again. Given the same, the Respondent's letters filed post filing of the refund application must merely be treated as letters seeking early reassessment and grant of refund. Reassessment must not be confused with finalization of provisional assessment. Finalization of provisional assessment (if applicable) took place on 2013 itself. Thus, the Respondent is rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the format as given below: Period of import From 30.03.2012 to 18.02.2013 Finalisation of assessment in respect of 28 B/Es 01.08.2016 Date of sanction of refund in respect of 28 B/Es 05.10.2016 Finalisation of assessment in respect of 2 B/Es 27.03.2018 Date of sanction of refund in respect of 2 B/Es 30.05.2018 On the above basis, the learned AR submitted that the refunds were sanctioned within the period of 3 months from the date of final assessment as prescribed under Section 18(4) ibid. He further submitted that even if the date is to be reckoned under Section 27, the period of limitation for filing refund application is to be computed from the date of final assessment or re-assessment only under Section 27 (1B)(c) ibid. In this case, no refund application was filed after final assessment, but the refund was granted within 3 months from the date of final assessment as per the provisions of sub-section (2) and (4) of section 18 of the Act. The Learned AR also vehemently argued that the respondent importer's eligibility to concessional CVD is first decided by the Commissioner (Appeals) in part, vide order 09.10.2014 by way of remand to Lower Authority for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order of the learned Commissioner of Customs (Appeals) in allowing the appeal filed by the importer in Order-in-Appeal No. MUMCUS-JSN-IMP-89/2019-20 dated 03.01.2020. The relevant portion of the said order dated 03.01.2020 is given below, for ease of reference: "7.4. Further, I observe that the refund in the instant case had arisen after the Commissioner (Appeals) vide OIA No.MUM-CUSTM-SMP-67-68/ 2014-15 dated 09.10.2014, had allowed the concessional notification benefits to the appellant. After the acceptance of the OIA on 19.11.2014, an Order-in-Original No. CAO/1213/AC/PK/2014-15 dated 15.01.2015 was also passed to settle the issue that concessional rate of CVD under the said notification must be extended to the goods dietary supplements as they are "ready to a packaged food". I find when the notification benefits were allowed by the appellate authority and further the issue was settled by passing an order, the date of the order of the appellate authority automatically becomes the date of receipt of the refund application as per explanation to Section 27A of the Customs Act, 1962, which is stated as under: "Section 27A. Interest on delayed refunds. - Explanation . - Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerning these two aspects in matters before me. 11. In view of the above, the goods described as "dietary supplements" are held to be food. The impugned orders are annulled and the adjudicating authority is directed to determine eligibility to notification benefit after necessary verification with regard to the twin issues discussed above." (Emphasis supplied) Hence, we find that the impugned order is factually incorrect in stating that notification benefits were allowed by the appellate authority. 7.3 Further, the issue of extending the concessional CVD of 5% under Sl. No.10(i) notification No.02/2011-Central Excise dated 01.03.2011 in respect of the imported dietary supplements, was passed by the original authority in terms of Section 17 of the Customs Act, 1962. The operative portion of the said order dated 15.01.2015 is extracted below: "ORDER 26. I order that the concessional CVD at 5% under Notfn. No.02/2011-C.E. under Serial No.10(i) must be extended to the goods dietary supplements under Section 17 of the Customs Act, 1962 as they undoubtedly are 'Ready to Eat Packaged Food'." Inasmuch as the aforesaid order, in finally extending the benefit of concessiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs or Deputy Commissioner of Customs under sub-section (2) of section 27, the order passed by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or as the case may be, by the court shall be deemed to be an order passed under that sub-section for the purposes of this section. Section 27. Claim for refund of duty. - (1) Any person claiming refund of any duty or interest,- (a) paid by him; or (b) borne by him, may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest: PROVIDED that where an application for refund has been made before the date on which the Finance Bill, 2011 receives the assent of the President, such application shall be deemed to have been made under sub-section (1), as it stood before the date on which the Finance Bill, 2011 receives the assent of the President and the same shall be dealt with in accordance with the provisions of sub-section (2): PROVIDED further that the limitation of one year shall not apply where any duty or interest has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se may be if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (b) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use; (c) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (d) the export duty as specified in section 26; (e) drawback of duty payable under sections 74 and 75; (f) the duty and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify: (g) the duty paid in excess by the importer before an order permitting clearance of goods for home consumption is made where- (i) such excess payment of duty is evident from the bill of entry in the case of self-assessed bill of entry; or (ii) the duty actually payable is reflected in the reassessed bill of entry in the case of reassessment. PROVIDED FURTHER that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of refund application which is required to be filed has been prescribed in the Customs Refund Application (Form) Regulations, 1995. It has also been made abundantly clear in these legal provisions by a specific 'Explanation' clause that for the purposes of payment of interest under section 27A ibid, the refund application shall be deemed to have been received only on the date on which a complete application is filed by the applicant. 8.3 In the context of the above legal provisions, we proceed examine the factual matrix of the case for deciding whether interest is payable or not, in the case before us. Documents placed in this case, reflect that the refund application was claimed to have been filed by the importer respondent vide their letter dated 02.04.2014 which is stamped with receipt seal of CRARS section of the New Custom House, Mumbai dated 08.04.2014. It is also a fact evident from the record that importer respondent vide their letter of 25.03.2016 addressed to Assistant Commissioner of Customs, CRARS section, Mumbai Custom House had stated that the refund application filed by them in respect of 31 B/Es during the period 25.04.2012 to 19.02.2013 is presently not traceabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontaining Bills of Entry and similarly for Sr. No.2 the Duty Deposit reference has been given as List-B. The amount of refund claim is indicated as Rs.4,46,48,538/- on the grounds that it is (1) by mistake of law; (2) contravention of Article 265 of the Constitution; (3) in accordance with Section 72 of the Contract Act; and (4) in accordance with Settled Law. Even though by calculation of the total amount of actual refunds sanctioned later for Rs.3,83,54,263/- (for 28 B/Es) and Rs.50,97,056/- (for 2 B/Es), and the one B/E relating to JNCH, Nhava Sheva which is under different Customs Jurisdiction for Rs.11,97,219/- (1B/E), we are able to understand that the total amount could have been indicated as Rs.4,46,48,538/-, however, we are unable to be convinced about the fact that how the said application dated 10.01.2014 submitted to "The Assistant Commissioner of Customs, Group-I, New Custom House, Ballard Estate, Mumbai-400 038" can be taken as a part of the refund application submitted much later on 08.04.2014, that too addressed to a different authority viz. "The Assistant Commissioner of Customs (I), CRARS, New Custom House, Ballard Estate, Mumbai-400 001." Thus, we find that on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum of Rs. 5,41,499/- be credited to the consumer welfare fund under Section 12C of the Act. This order was challenged by the appellant by filing a writ petition in the High Court which was dismissed by the judgment and order under appeal. 5. The questions involved in the appeal are no more res integra after the decision of nine judges' bench in Mafatlal Industries Ltd. & Ors. v. Union of lndia & Ors., [(1997) 5 SCC 536]. Learned Counsel for the appellant has, however, contended that the present case was outside the provisions of the Act as the RF solution was not 'goods' within the meaning of the Act that having been finally decided in appellant's favour in terms of the order of the Tribunal dated September 25, 1990, and, therefore, the receipt and retention of the amount of the excise duty was totally without the authority of law and without jurisdiction. Such a claim of refund, it was contended, can be entertained as held in Mafatlal Industries case in paragraph 108(ii) in the following words : "Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total 30 B/Es, has mentioned that the agreements entered into between the supplier abroad & importer respondent and that between the importer & it's distributor, sale invoices of the subject goods were submitted on 30.08.2016. Upon analysis of such documents submitted by the importer respondent, the original authority had come to the conclusion that the burden of differential CVD paid by the importer respondent was not passed on to any other person, and thus the refund of duty paid in excess, are eligible to be paid to the importer respondent. These specific facts in respect of the refund application, dealt by it before sanction of refund clearly prove that the complete documents in respect of the refund claim was submitted by the importer respondent only on 30.08.2016. The extract of the relevant paragraphs of the order dated 05.10.2016 are as follows: "13. From the record, I find that similar imports of the importer during the period between 01.04.2011 to 31.03.2012 which were assessed by providing the notification benefit, were ordered to be investigated by SIIB(I). This case was adjudicated vide Order-in-Original No.1168/AC/PC/ 2012-13 Dtd. 28.03.2013 wherein the importer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore fulfills the requirements of principles of unjust enrichment and that if refund is granted, will not be enriched unjustly. 25. I find therefore the party has met all requirements of section 27 of Customs Act and seems to be eligible for refund as claimed by them." (Emphasis Supplied) 8.8 Similarly, we also find that the refund order dated 30.05.2018 sanctioning refund in respect of remaining 2 B/Es out of the total 30 B/Es, have mentioned the following specific facts in respect of the refund application dealt by it. Additionally, in the refund relating to two B/Es, the importer respondent had supplied the indemnity bond as prescribed only on 27.04.2018. The extract of the relevant paragraphs in the said order are as follows: "16. I find that as the B/Es were provisionally assessed and now vide letter F.No.S/26-Misc.-15/2016-17 Gr.-I dated 27.03.2018, AC/Gr-I has informed that the 02 Bills of Entry No.9338974 and 9338978 both dated 18.02.2013 which were not finally assessed due to system error (para 12 of O-in-O) are now assessed finally i.e. on 27.03.2018. xx xx xx xx xx 22. To examine above claims and explanations by the CA, the copies of agreements between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed by the importer respondent. 8.10 Thus we also do not find it necessary to go into the details of other points put forth by Revenue and learned Advocate for discussing the issue of whether payment of interest on delayed refund arises in this case and for coming to the conclusion about the date of receipt of complete refund application. 9.1 The extract of Section 17 & 18 ibid, are as follows: Section 17. Assessment of duty. - (1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided in section 85, self-assess the duty, if any, leviable on such goods. (2) The proper officer may verify the 2 [the entries made under section 46 or section 50 and the self assessment of goods referred to in subsection (1)] and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary. Provided that the selection of cases for verification shall primarily be on the basis of risk evaluation through appropriate selection criteria. (3) For the purposes of verification under sub-section (2), the proper officer may require the importer, expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed as the case may be, and the duty provisionally assessed. (1A) Where, pursuant to the provisional assessment under sub-section (1), if any document or information is required by the proper officer for final assessment, the importer or exporter, as the case may be, shall submit such document or information within such time, and the proper officer shall finalise the provisional assessment within such time and in such manner, as may be prescribed. (2) When the duty leviable on such goods is assessed finally or reassessed by the proper officer in accordance with the provisions of this Act, then - (a) in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed or re-assessed, as the case may be, and if the amount so paid falls short of, or is in excess of the duty finally assessed or re-assessed, as the case may be, the importer or the exporter of the goods shall pay the deficiency or be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he declares the correct classification, applicable rate of duty, value, benefit of exemption notifications claimed, if any, etc. in respect of the imported goods while presenting Bill of Entry. The declaration filed by the importer may be verified on the basis of risk assessment by the Risk Management Systems (RMS), which not only provides assured facilitation to those importers having a good track record of compliance but also ensures that on the basis of certain rules, intervention, etc., high risk consignments are interdicted for detailed verification before the Customs clearance, either by verification of assessment or conducting examination of the imported goods or both. If the self-assessment is found incorrect, the duty may be reassessed. In cases where there is no interdiction by RMS or non existence of any other factor, there will be no cause for the declaration filed by the importer to be taken up for verification, and such Bills of Entry will straightaway be facilitated for clearance without assessment and examination, on payment of applicable duty, if any. Further, in cases, where the importer is not able to determine the duty liability or make self-assessment for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions of such importer, irrespective of the port of import shall be decided by the SVB branch of the concerned Customs House, where they registered for such detailed valuation by SVB. Earlier there was a provision of taking Extra Duty Deposit (EDD) @ 1% of declared assessable value for four months, during which the importer is supposed to submit requisite documents and information to SVB as per CBIC circular dated 23.2.2011, but subsequently it was withdrawn in order to reduce the transaction cost, as per the revised circular dated 09.02.2016. However, if the importer fails to provide the documents and information required for SVB inquiries, within 60 days of such requisition, then there is a requirement of security deposit at a rate of 5% of the declared assessable value for a period not exceeding the next three months. Upon completing investigations, the SVB shall submit the findings in the form of an Investigation Report (IR) incorporating all relevant facts, submissions made by the importer, investigative findings, grounds for acceptance or rejection of transaction value, and the extent of influence on declared transaction value, if any. The IR shall include all relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of solemn affirmation and written submission made by the importer and any change, technical error/omission should be brought to the notice of the department without delay by the importer respondent. Thus, the SVB order is limited to the extent of finalizing the assessments in respect of valuation of goods among the related parties and does not cover the dispute relating to the availment of concessional CVD by the importer respondent. The list of 68 B/Es finalized for sanction of refund of the balance amount of EDD, over and above the enhancement made by SVB order, also contained few B/Es which are referred to in the refund claims filed by the importer respondent later on account of concessional CVD claimed by them, which is narrated in the last sentence of paragraph 2.2 of this order. However, the facts indicate that the dispute regarding concessional CVD claimed in respect of dietary supplement had arisen from a separate proceedings initiated by SIIB by issue of SCN dated 28.08.2012. Thus, we find that the assessments in finalizing the SVB transaction do not impinge upon the issue of concessional CVD claimed by the importer respondent. 10.1 We also find from the facts germane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) by filing an appeal, on the above stand. Hence the same cannot be agitated at this stage. For the same reason, the finding given in the impugned order that the dispute in respect of extending concessional benefit of CVD was finalized by the Commissioner of Customs (Appeals) in his order dated 09.10.2014 is also factually incorrect. Hence, we find no merits in the grounds argued by the learned Advocate on this point. 11. We also find that the matter regarding interest payable on delayed refunds have been dealt by the Hon'ble High Court of Karnataka in the case of Commissioner of Customs, Mangaluru Customs Vs. JSW Steel Ltd., reported in 2022 (379) E.L.T. 451 (Kar.) The relevant paragraphs of the aforesaid judgement is extracted below: "3.The facts leading to the case are as under : The respondent is a manufacturer of iron and steel products and had imported 12 consignments of coking coal/PCI coal/steam coal during the period from 6-5-2014 to 20-4-2015 from M/s. JSW International Tradecorp. Pvt. Ltd. The importer claimed refund of 1% of Extra Duty Deposit (for short "EDD") paid after issue of Special Valuation Branch (for short "SVB"). However, the claim of the importer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to pay interest in terms of Section 27A of the Act, 1962. On meticulous examination of the reasons and conclusions arrived at by the Tribunal, we would find that the Tribunal has not examined the findings arrived at by the Original Authority as well as the Appellate Authority. In fact, we would find that the Tribunal has not at all a recorded finding indicating that the order passed by the original authority as well as the Appellate Authority suffers from perversity. We would find that the Tribunal has not even discussed the facts of the present case on hand. What emerges from the order passed by the Tribunal is that it has proceeded to order for payment of interest on the ground that the application is not decided within a period of three months. 13. From the records, we would find that the original refund application was filed on 22-4-2016 which was rejected vide order dated 12-7-2016 on the ground that it was premature as the bills of entry were provisionally assessed and were yet to be finalized. It can also be gathered from the records that the importer had not enclosed all relevant documents until a show cause notice was issued by the Department which is dated 7-7-2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
