ITC_Ltd_Vs_CCE_Kolkata_IV
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 293294 OF 2009
ITC LIMITED … APPELLANT(S)
VERSUS
COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV … RESPONDENT(S)
WITH
CIVIL APPEAL NO.2960 OF 2010
CIVIL APPEAL NO.5878 OF 2011
CIVIL APPEAL NO.310 OF 2011
CIVIL APPEAL NOS.44324434 OF 2011
CIVIL APPEAL NO.6407 OF 2011
CIVIL APPEAL NOS.15751582 OF 2012
CIVIL APPEAL NO.1585 OF 2012
CIVIL APPEAL NO.1571 OF 2012
CIVIL APPEAL NO.5490 OF 2011
CIVIL APPEAL NO.5491 OF 2011
CIVIL APPEAL NO.5489 OF 2011
Signature Not Veri fied
Digitally signed by
JAYANT KUMAR ARORA Date: 2019.09.18
16:26:28 IST
Reason:
CIVIL APPEAL NO.6054 OF 2011
CIVIL APPEAL NO.7710 OF 2014
CIVIL APPEAL NO.5960 OF 2016
CIVIL APPEAL NO.96 OF 2016
CIVIL APPEAL NOS. 738486 OF 2019
(@ SPECIAL LEAVE PETITION (C) NOS.1611416116 OF 2017)
CIVIL APPEAL NO. 7387 OF 2019
(@ SPECIAL LEAVE PETITION (C) NO.25193 OF 2016)
CIVIL APPEAL NO. 7388 OF 2019
(@ SPECIAL LEAVE PETITION (C) NO.26530 OF 2016)
CIVIL APPEAL NO. 20852 OF 2017
CIVIL APPEAL NO. 7389 OF 2019
(@ SPECIAL LEAVE PETITION (C) NO.4294 OF 2017)
CIVIL APPEAL NO. 7391 OF 2019
(@ SPECIAL LEAVE PETITION (C) NO.6269 OF 2017)
CIVIL APPEAL NO. 7392 OF 2019
(@ SPECIAL LEAVE PETITION (C) NO.15175 OF 2017)
CIVIL APPEAL NO.18765 OF 2017
CIVIL APPEAL NO. 7393 OF 2019
(@ SPECIAL LEAVE PETITION (C) NO.31561 OF 2017)
CIVIL APPEAL NOS. 739496 OF 2019
(@ SPECIAL LEAVE PETITION (C) NOS.50405042 OF 2018)
CIVIL APPEAL NO. 7397 OF 2019
(@ SPECIAL LEAVE PETITION (C) NO.15363 OF 2018)
CIVIL APPEAL NO.10082 OF 2018
J U D G M E N T
ARUN MISHRA, J.
1. These appeals have been preferred by the assessees as well as by the
Union of India aggrieved by the judgment and order passed by the High
Courts and Customs, Excise and Service Tax Appellate Tribunal, Kolkata
(for short referred to as “the Tribunal”).
2. The question involved in these appeals is whether in the absence of
any challenge to the order of assessment in appeal, any refund application
against the assessed duty can be entertained?
3. The tribunal has in the case of ITC Limited opined that unless the
order of assessment is appealed, no refund application against the assessed
duty can be entertained. On the other hand, in the cases in which Union of
India or the Department has come up in appeal, the High Court of Delhi
framed question of law as “whether non filing of appeal against the assessed Bill of Entry in which there was no lis between the importer and the
Revenue at the time of payment of duty will deprive the importer of his right
to file refund claim under Section 27 of the Customs Act, 1962 (for short,
“the 1962 Act”)”?
4. While interpreting provisions contained in Section 27 of the Act, the
High Court has opined that when there is no assessment order for being
challenged in appeal, which is passed under Section 27(1)(i) of the Act, because there is no contest or lis and hence no adversarial assessment
order, the cases would be covered by the provision of Section 27(i) (ii) and
refund applications can be maintained by the assessee even in the absence
of filing appeals against the assessed bill of entry. The High Court of Madras
has opined similarly.
5. In the case of Union of India & Ors. vs. Micromax Informatics Ltd.,
reported in (2016) 335 ELT 446 (Del) the High Court of Delhi has opined
that an important change has been made in Section 27 of the Customs Act
in 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. It has also been observed that 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 is refundable to the applicant. It has been opined that under
Section 27 of the Act as amended, it is not open to an authority to refuse to
consider the application for refund only because no appeal has been filed
against the assessment order, if there is one.
6. The High court has further opined that although under Section 27(2)
of the Act, the word ‘assessment’ includes a selfassessment, the clearance
of the goods upon filing of the bills of entry and payment of duty is not per
se an assessment order in the context of Section 27(1) (i) as it stood prior to
8.4.2011, particularly, if such duty has not been paid under protest. In any
event, after 8.4.2011, as long as customs duty or interest has been borne by
a person, a claim for refund made by such person under Section 27(1) of
the Act will have to be entertained and an order passed thereon by the
authority concerned, even where an order of assessment may not have been
reviewed or modified in appeal. Reliance has been placed on the case of Aman Medical Products Limited v. Commissioner of Customs, Delhi, 2010 (250) ELT 30 (Del).
7. The facts of the case of ITC Limited are that the appellants
manufacture paper from both conventional and unconventional raw
materials. In the course of the manufacturing activity, waste paper/ broke
arises which are recycled in the manufacturing process by making pulp.
Sometimes, after entry in the RG 1 register, the paper is found to be
defective and incapable of being sold and as such is required to be
reprocessed and if that is not possible, then it is rejected and has to be re
pulped and recycled.
8. The appellant had been paying duty on paper cleared from its factory.
The rate of duty of paper manufactured from conventional and
unconventional raw material differed. The appellants availed exemption
under Notification No.67/95CE dated March 16, 1995 as to the duty in
respect of waste paper/ fresh broke. By Notification No.6/2000CE dated
March 1, 2000 complete exemption was granted in respect of paper up to
the specified quantitative limit manufactured from unconventional raw
materials. Upon receipt of a letter dated March 30, 2001 from the
Superintendent of Central Excise, the Appellant examined the matter and
realized the mistake committed by it in availing the exemption under
Notification No.67.95CE in respect of waste paper/ broke utilized in the
manufacture of paper cleared at ‘nil’ rate of duty under Notification
No.6/2000CE. From May 2001 onwards, the appellant stopped availing
the exemption and started payment of duty on waste paper/broke.
9. The relevant period involved in the appeal i.e. July 2001 to March
2002. The Appellant’s assessments for this period were provisional and
these entries were finalized on 30.01.2003. The provisional assessment
order was passed on 1.3.2002. The appellant has claimed that at the time
of the said final assessment order dated 30.01.2003, it was not aware of the
notification No.10/96CE or the said circular dated 1.3.2001 and as such,
no claim thereunder was made by it till that time nor was any such claim so
considered or decided in the said final assessment order.
10. On July 18, 2003, the appellant filed a refund claim for an amount of
Rs.28,73,120/ in respect of the duty paid on the said waste paper/ broke
during the period from July 2001 to March 2002. The said refund claim
was filed under section 11(b) of the Central Excise Act, 1944 (for short,
referred to as “the 1944 Act”) and within the statutory period of limitation.
11. A show cause notice was issued as to why the said claim be not
rejected to which a reply was filed. The assessment committee rejected the
said claim. The Commissioner of Appeals dismissed the appeal. Thereafter,
successive appeal was preferred before the Tribunal. The Tribunal has
rejected the refund claim of the appellant. Hence, the appeal has been preferred under section 35(b) of the 1944 Act.
12. In the case of Union of India & Ors. v. Micromax Informatics Ltd. , the
respondents (i.e. Micromax Informatics Ltd.) had imported mobile handsets
including cellular phones during the period 30.07.2014 to 29.8.2014. At
the time of customs clearance, they paid Additional Customs Duty (CVD)
under Section 3(1) of the Customs Tariff Act, 1975 at the rate of 6 %. In all,
the imports bills of entry were selfassessed by the respondents in terms of
the SelfAssessment Scheme under section 17 of the Act and were thus finally assessed. This Court in M/s. SRF v. Commissioner of Customs, Chennai 2015 [318] ELT 607 (SC) held that for quantification of CVD in case
of an article that has been imported, it has to be presumed that the said
imported article has been manufactured in India and then the amount of
excise duty leviable thereon has to be ascertained for determining the extent
of exemption from payment of CVD to which the importer would be entitled.
The respondent had filed the refund claim of Rs.35.89 crores for duty totally
paid under the selfassessed bills of entry, under section 27 of the 1962 Act
in the Air Cargo Export Commissionerate, claiming a refund of the
Additional Customs Duty (CVD) in view of Serial Number 263 A and
Condition No.16 of notification No.12/2002Ex. Dated 17.03.2012 and for
the said Condition No.16, mobile handsets were chargeable to a duty of 1%
if no CENVAT credit had been availed by the importer. The Micromax
claimed that they had made excess payment while complying with the
condition No.16 of the aforesaid notification. They claimed the refund of
deferential duty of 5%. The Assistant Commissioner (Refunds) rejected all
the claims as not maintainable in the absence of evidence of excess
payment of duty. He further held that the Bills of Entry had already been
assessed and there were assessment orders which could only be reviewed or
modified in appeal. It was also observed that the respondent failed to
submit any reassessment order or speaking order under section 17(5) of the
1962 Act and that it was beyond the jurisdiction of the Refund Branch to
decide the issue on merits. The officer considering a refund claim cannot
sit in appeal over an assessment made by a competent officer. The High Court held that selfassessment is not an assessment order per se and allowed the writ petition. Hence the appeal by the Union of India.
13. In Commissioner of Customs, New Delhi v. Aman Medical Products Ltd. ,
the respondents had imported cannula for the purpose of manufacture of
injection needles. At the time of filing of bills of entry, the respondent could
not indicate the benefits available under notification No.6/2002 Cus, dated
1.3.2002 which provided a concessional rate of duty on the imported goods.
The bills of entry were assessed finally. Subsequently, the respondent filed
an application for refund. The refund claim was rejected by the Deputy
Commissioner. The respondent preferred an appeal before the
Commissioner (Appeals) for grant of refund of excess duty paid by them.
The appeal was allowed by the Commissioner of Appeals. The Department
filed an appeal before the Tribunal. The Tribunal observed that refund
claim cannot be adjudicated on merits. The respondent – Aman Medical
Products Ltd filed a writ petition before the High Court. The writ petition
has been allowed.
14. Shri P. Chidambaram, learned senior counsel has taken us through
the definition of the ‘assessment’ as prevailed under the 1962 Act and the
amended definition under the Act, assessment w.e.f. 8.4.2011, Finance Act,
2011, Section 17 and Section 27 as amended by the Finance Act, 2011. It
was urged by learned senior counsel that prior to the amendment by the
Finance Act, 2011, the scheme of assessment under section 17 of the
Customs Act was such that once a bill of entry was filed, examination and
testing of the imported goods were done by the proper officer. Thereafter,
an order of assessment was passed after the physical examination.
Accordingly, section 27 of the Customs Act provided that claim for refund to
be made by any person who had (a) paid duty in pursuance of an order of
assessment or (b) a person who had borne the duty. Earlier, there was a
necessity for an order of assessment by a proper officer under section 17 of
the Customs Act. After the amendment to the Act in 2011, there is no need
to get the assessment of bill of exchange done for claiming a refund of
excess duty paid under Section 27 of the Act, as now the bill of entry is to
be selfassessed by the importer or exporter and will be subject to
verification. Further, under section 17(4) of the Customs Act if it is found
that selfassessment of duty has not been done correctly by an importer or
exporter the proper officer, may reassess the duty. In case of reassessment
within fifteen days from the date of reassessment under section 17(5), a
speaking order has to be passed by the proper officer. In the case of re
assessment done under section 17(4), it is only in these circumstances an
order is passed. If no order of assessment is passed in the case of self
assessment, the refund application can lie. It was urged that section 27
has also been amended by way of amendment by the Finance Act, 2011. An
application for refund of duty and the requirement of order of assessment
that was requisite before the amendment has now been expressly removed.
It would be a retrograde step to interpret the amended provision otherwise
and to deny the refund claim which is not adjudicatory when the bill of entry has been passed. In the case of selfassessment, the duty paid under
a mistake can always be claimed without filing an appeal and in that event
concerned officer has to look into the matter whether the claim for refund
was justified.
15. Reliance has been placed on behalf of the assessee on SRF Limited vs.
Commissioner of Customs (supra). It is not necessary to pass an order of
reassessment or speaking order under the amended provisions of section
17. The decision in Priya Blue Industries v. Commissioner of Customs 2004
(172) E.L.T. 145 (SC) is based upon the unamended provisions, thus,
cannot hold the field and is inapplicable in view of the amendment made in
the provisions. Under section 17(1) of the amended provisions, bills of entry
have to be selfassessed by importer or exporter. The verification of the self
assessment has now been made optional. The selfassessment is not to be
disturbed unless there is a verification required by the proper officer and for
this purpose, he may examine or test goods or part thereof.
16. It was further urged on behalf of the assessee that amended section
17 and section 27 are to be read together. By amended section 27 it is now
provided that an application for refund of duty will be made by any person
who has paid the duty or by any person who has borne the duty. Earlier
refund could be claimed by the person who has paid the duty. Under the
post amendment provision the words “in pursuance to the order of
assessment” have been deleted and a refund claim is maintainable by the
assessee in case duty has been “paid by him”. The legislative intent is clear.
Now the order of assessment has been made irrelevant and a reassessment
to an order is no longer a prerequisite for maintaining a refund claim. Now
under the scheme of selfassessment, there would be no order of assessment by the proper officer.
17. It was further urged on behalf of the assessee that section 27 cannot
be rendered otiose or redundant. Section 27 does not contain any
stipulation which may suggest that refunds can be filed only after the Bill of
Entry has been appealed against. In the absence of such a statutory
condition, a restriction on refund claim cannot be imported into the statute.
Taxing statute has to be strictly interpreted and there is no room to infer any intendment thereof as held by this Court in Commissioner of Wealth Tax, Gujarat III Ahmedabad v. Ellis Bridge Gymkhana , (1998) 1 SCC 384.
Reliance has also been placed on the decision of this Court in Maharashtra
State Financial Corporation v. Jaycee Drugs and Pharmaceuticals (P.) Ltd. (1991) 1 SCC 637, O.P. Singla & Anr. v. Union of India & Ors., (1984) 4 SCC
450, and Union of India v. Popular Construction Co., (2001) 8 SCC 470.
18. It was also urged that section 27 is a remedy available to the assessee
for the refund of duty paid and section 28 is a remedy available to the
Department on the recovery of duty not levied and short levied or
erroneously levied. Both the remedies can be availed without filing appeals.
It was further urged that no appeal can be filed under section 128 of the
Customs Act against the bill of entry. As the scheme of assessment under
Section 17 of the Customs Act is that of selfassessment and only when
such a selfassessment is disputed by the proper officer, an order of
assessment is passed then he may appeal to the relevant appellate
authority within 60 days of the communication of the order. It is only in a
situation where speaking order is passed then the assessee is required to
file an appeal. Unless a speaking order of assessment is passed, no appeal
can lie and the only option for refund of duty paid is to file a refund claim.
The bill of entry is merely stamped to allow clearance of the goods. No
reasons are provided in the bill of entry on account of which it can be
regarded as an order which can be subjected to appeal under section 128 of
the Customs Act. The judgment of this Court in Commissioner of Customs v.
Sayed Ali (265) ELT 17 (SC) is not relevant. The said judgment was passed
in respect of section 28 of the Customs Act.
19. On behalf of the Union of India/Department, it is contended that self
assessment is an assessment. It is not open to the proper officer after
accepting the selfassessment to entertain a claim for refund in the absence
of the selfassessment being questioned in the appeal. The direction to
reassess the bill of entry after the expiry of more than a year cannot be ordered. Reliance has been placed on Collector of Central Excise, Kanpur v.
Flock (India) Pvt. Ltd., 2000 (120) ELT 285 (SC). In the instant case, the
bills of entry were filed and they were selfassessed. It is an assessment
under the Act and in case benefit of notification has not been claimed, in
the absence of challenge to assessment of bills of entry by way of filing the
appeal, the benefit of notification cannot be claimed. An application for
refund is not maintainable in view of the law laid down by this Court in
Flock (India) Pvt. Ltd. (supra) and Priya Blue Industries (supra). Once the
selfassessment/assessment attains finality and has not been questioned, it
cannot be reopened at any point of time. The refund claim is not an
appellate proceeding. The officer considering a refund claim cannot sit in
appeal over an assessment made by a competent officer. The officer
considering the refund claim cannot also review an assessment order. Even
after the amendment is made in 2011, the conditionality of payment having
been made pursuant to an order of assessment continue to exist. As the
selfassessment of bills of entry is an order of assessment per se, unless the
order of assessment passed under section 2(2) of the Act is appealed before
Commissioner of Appeals for modification no claim for refund can be
entertained. The provision of section 128 cannot be rendered otiose. The
amendment has been made in order to simplify the procedure but the legal
effect of the selfassessment is that of assessment. While processing self
assessment some exercise has to be done. Once it is accepted, it becomes
an order of assessment.
20. Right to appeal is available to any person i.e. to the department as
well as to importer/exporter against an order of selfassessment. Until and
unless assessment order is modified and a fresh order of assessment is
passed and duty redetermined, the refund cannot be granted by way of
refund application. The refund authorities cannot take over the role of
Assessing Officer. The officer considering refund claim cannot reassess an
assessment order. An assessment order has to be questioned within the
stipulated period of limitation. The refund application cannot be
entertained directly under section 27 unless the order of assessment is appealed against and is modified.
21. The first question for consideration is whether the assessment
includes selfassessment also. Prior to the amendment by the Finance Act,
2011 the assessment had been defined in Section 2(2) thus:
“2(2) “assessment” includes provisional assessment, reassessment and any order of assessment in which the duty
assessed is nil;”
22. After the amendment of Section 2(2) made by the Finance Act, 2011
the definition of ‘assessment’ reads thus:
“2(2) “assessment” includes provisional assessment, self assessment, reassessment and any assessment in which the
duty assessed is nil;”
23. It is apparent from the amended definition that selfassessment,
provisional assessment, reassessment and any assessment in which the
duty assessed is nil, is an assessment. Assessment includes self
assessment, when the provision of selfassessment has been incorporated
in Section 17(1), and corresponding change has been made in the definition
of assessment in Section 2(2). Earlier the word selfassessment was not included in the definition of assessment.
24. The assessment of duty was provided in section 17 of the unamended
Act prior to 2011. Preamended section 17 of the Customs Act is extracted
hereunder:
“17. Assessment of duty.—(1) After an importer has entered any imported goods under section 46 or an exporter
has entered any export goods under section 50 the imported
goods or the export goods, as the case may be, or such part
thereof as may be necessary may, without undue delay, be
examined and tested by the proper officer.
(2) After such examination and testing, the duty, if any, leviable on such goods shall, save as otherwise provided in
section 85, be assessed.
(3) For the purpose of assessing duty under subsection (2),
the proper officer may require the importer, exporter or any
other person to produce any contract, broker’s note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods, as the case
may be, can be ascertained, and to furnish any information required for such ascertainment which is in his power to produce or furnish, and thereupon the importer, exporter or
16
such other person shall produce such document and furnish
such information.
(4) Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under subsection
(3); but if it is found subsequently on examination or testing
of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be reassessed to duty.
(5) Where any assessment done under subsection (2) is contrary to the claim of the importer or exporter regarding
valuation of goods, classification, exemption or concessions
of duty availed consequent to any notification therefor under
this Act, and in cases other than those where the importer or
the exporter, as the case may be, confirms his acceptance of
the said assessment in writing, the proper officer shall pass a speaking order within fifteen days from the date of assessment of the bill of entry or the shipping bill, as the case may be.”
25. Section 17 as amended by Finance Act, 2011 is extracted hereunder:
“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, selfassess the duty, if any,
leviable on such goods.
(2) The proper officer may verify the selfassessment of such goods and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary.
[(3) For verification of selfassessment under subsection (2),
the proper officer may require the importer, exporter or any other person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall
produce such document or furnish such information.]
17
(4) Where it is found on verification, examination or testing of
the goods or otherwise that the selfassessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, reassess
the duty leviable on such goods.
(5) Where any reassessment done under subsection (4) is contrary to the selfassessment done by the importer or exporter regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any
notification issued therefor under this Act and in cases other
than those where the importer or exporter, as the case may be, confirms his acceptance of the said reassessment in writing, the proper officer shall pass a speaking order on the reassessment, within fifteen days from the date of re assessment of the bill of entry or the shipping bill, as the case may be.
(6) Where reassessment has not been done or a speaking order has not been passed on reassessment, the proper officer may audit the assessment of duty of the imported goods or export goods at his office or at the premises of the importer or exporter, as may be expedient, in
such manner as may be prescribed.
Explanation.—For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under section 46 or an exporter has entered
any export goods under section 50 before the date on which
the Finance Bill, 2011 receives the assent of the President, such imported goods or export goods shall continue to be governed by the provisions of section 17 as it stood immediately before the date on which such assent is
received.]”
(emphasis supplied)
26. Section 27 deals with a claim for refund of duty. Provision of section 27
which prevailed before amendment by Finance Act, 2011 is extracted hereunder:
“27. (1) Any person claiming refund of any duty
- paid by him in pursuance of an order of assessment; or
- borne by him,
may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant
18
Commissioner of Customs or Deputy Commissioner of Customs
- in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, before the expiry of one year ;
- in any other case, before the expiry of six months,
from the date of payment of duty and interest, if any, paid on
such duty, in such form and manner as may be specified in
the regulations made in this behalf and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 28C) as the
applicant may furnish to establish that the amount of duty
and interest, if any, paid on such duty in relation to which
such refund is claimed was collected from, or paid by, him
and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person :
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this subsection and the same shall be dealt with in accordance with the provisions of subsection (2):
Provided further that the limitation of one year or six months, as the case may be, shall not apply where any duty
and interest, if any, paid on such duty has been paid under
protest:
Provided also that in the case of goods which are exempt from payment of duty by a special order issued under sub section (2) of section 25, the limitation of one year or six months, as the case may be, shall be computed from the date of issue of such order.
[Provided also that where the duty becomes refundable as a consequence of judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year or six months, as the case may be, shall be computed from the date of such judgment, decree,
order or direction.
Explanation I.For the purposes of this subsection, “the date
of payment of duty and interest, if any, paid on such duty”, in relation to a person, other than the importer, shall be construed as “the date of purchase of goods” by such person.
Explanation II.Where any duty is paid provisionally under
section 18, the limitation of one year or six months, as the
case may be, shall be computed from the date of adjustment
of duty after the final assessment thereof.
(emphasis supplied)”
19
27. The provision of Section 27 of the Customs Act as amended by Finance Act, 2011 is extracted hereunder:
“27. Claim for refund of duty. (1) Any person claiming refund of any duty or interest,
- paid by him; or
- 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 subsection (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 subsection (2):
Provided further that the limitation of one year shall not
apply where any duty or interest has been paid under protest.
Provided also that where the amount of refund claimed is
less than rupees one hundred, the same shall not be refunded.
Explanation. For the purposes of this subsection, “the date of payment of duty or interest” in relation to a person,
other than the importer, shall be construed as “the date of
purchase of goods” by such person.
(1A) The application under subsection (1) shall be accompanied by such documentary or other evidence (including the documents referred to in section 28C) as the
applicant may furnish to establish that the amount of duty
or interest, in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty or interest, has not been passed on by him to any other
person.
(1B) Save as otherwise provided in this section, the period of limitation of one year shall be computed in the following manner, namely:
(a) in the case of goods which are exempt from payment of
duty by a special order issued under subsection (2) of section 25, the limitation of one year shall be computed from
the date of issue of such order;
(b) where the duty becomes refundable as a consequence of
any judgment, decree, order or direction of the appellate
authority, Appellate Tribunal or any court, the limitation of
one year shall be computed from the date of such judgment,
decree, order or direction ;
(c) where any duty is paid provisionally under section 18, the limitation of one year shall be computed from the date of adjustment of duty after the final assessment thereof or in
case of reassessment, from the date of such reassessment.]
(2) If, on receipt of any such application, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied that the whole or any part of the duty
and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund:
Provided that the amount of duty and interest, if any, paid
on such duty as determined by the Assistant Commissioner
of Customs or Deputy Commissioner of Customs under the foregoing provisions of this subsection shall, instead of being credited to the Fund, be paid to the applicant, if such
amount is relatable to
(a) the duty and interest, if any, paid on such duty paid by
the importer [or the exporter, as the case 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;
- the duty and interest, if any, paid on such duty on imports made by an individual for his personal use ;
- 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;
- the export duty as specified in section 26;
- drawback of duty payable under sections 74 and 75;
- 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:
- the duty paid in excess by the importer before an order
permitting clearance of goods for home consumption is made
where
- such excess payment of duty is evident from the bill of entry in the case of selfassessed bill of entry; or
- 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 Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person.
21
(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal, the National Tax Tribunal or any Court or in any other provision of this Act or the regulations made thereunder or any other law for the time being in force, no
refund shall be made except as provided in subsection (2).
(4) Every notification under clause (f) of the first proviso to
subsection (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its reassembly, and the Central Government shall, seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day
on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only
in such modified form or be of no effect, as the case may be,
but without prejudice to the validity of anything previously
done thereunder.
(5) For the removal of doubts, it is hereby declared that any
notification issued under clause (f) of the first proviso to sub section (2), including any such notification approved or modified under subsection (4), may be rescinded by the Central Government at any time by notification in the Official
Gazette.”
(emphasis supplied)
28. Section 28 deals with the recovery of duties not levied or not paid or
short levied or short paid or erroneously refunded. Section 28(1) is extracted
hereunder:
“28. Recovery of duties not levied or not paid or short
levied or shortpaid or erroneously refunded. (1) Where any
duty has not been levied or not paid or has been shortlevied
or shortpaid or erroneously refunded, or any interest payable has not been paid, partpaid or erroneously refunded, for any reason other than the reasons of collusion
or any wilful misstatement or suppression of facts,
(a) the proper officer shall, within two years from the relevant
date, serve notice on the person chargeable with the duty or
interest which has not been so levied or paid or which has
been shortlevied or shortpaid or to whom the refund has
22
erroneously been made, requiring him to show cause why he
should not pay the amount specified in the notice;
Provided that before issuing notice, the proper officer shall
hold prenotice consultation with the person chargeable with
duty or interest in such manner as may be prescribed;
(b) the person chargeable with the duty or interest, may pay
before service of notice under clause (a) on the basis of,
- his own ascertainment of such duty; or
- the duty ascertained by the proper officer,
the amount of duty along with the interest payable thereon
under section 28AA or the amount of interest which has not
been so paid or partpaid:
Provided that the proper officer shall not serve such show cause notice, where the amount involved is less than rupees
one hundred.”
(emphasis supplied)
29. The first question for consideration is whether in the case of self
assessment without passing a speaking order, it can be termed to be an
order of selfassessment. It was urged on behalf of the assesses that there is
no application of mind and merely an endorsement is made by the
authorities concerned on the bill of entry which cannot be said to be an
order much less a speaking order.
30. In Escorts Ltd. v. Union of India & Ors . (1994) Supp. 3 SCC 86 the
question arose for consideration as to the Bill of Entry classifying the
imported goods under a certain tariff item and paying the duty thereon.
This Court held that in such a case signing of the bill of entry itself
amounted to passing an order of assessment. Hence, the application
seeking a refund on the ground that imported goods fell under a different
item attracting a far lower rate of duty, having been filed more than six
months after the payment of duty, was rightly rejected as timebarred. What
is of significance is that an entry made in the bill of entry has been held to
23
be an order of assessment passed by the Assessing Officer. This Court
considered the provisions of sections 47 and 17 of the Customs Act and has
observed:
“9. Reading Sections 47 and 17 together, it is clear beyond any doubt, that as soon as the bill of entry is filed,
the proper officer examines the goods, tests them, assesses
the proper duty and permits clearance of goods only after the
duty and other charges, if any, are paid. In the scheme of the
Act, there is no room for contending that any goods will be allowed to be cleared without assessment of the duty, whether provisional or final, as the case may be.
10. Now it may be noticed that the Act does not prescribe
any particular form in which the order of assessment is to be
made. In the very nature of things, no formal order of assessment can be expected when there is no dispute as to
the classification or the rate of duty. No formal order can be
expected in such a case, it is more like ‘acrossthecounter’
affair. In the present case, it may be reiterated that the appellant himself classified the goods under tariff item No. 73.33/40 and paid the duty at the rate applicable thereunder. At that stage, he did not raise any dispute either as to classification or as to the right of duty applicable. Hence, there was no occasion for passing a formal order since there was no lis at that stage. The bill of entry presented by the appellant was signed, signifying approval by
the assessing officer. That itself is an order of assessment in
- a situation. We are, therefore, not prepared to agree
- there is no order of assessment in this case, and therefore, the limitation prescribed in Section 27 did not begin to run. Section 27 is emphatic in language. It says that
an application for refund of duty shall be made before the
expiry of six months from the date on which the duty was
paid. In the face of this provision, the authorities under the
Act, including the Government of India, had no option but to dismiss the appellant’s application. This is also the view taken by this Court in Madras Rubber Factory Ltd. v. Union
of India (1976) 2 SCC 255.”
(emphasis supplied)
31. It is apparent from the aforesaid discussion that the endorsement made
on the bill of entry is an order of assessment. It cannot be said that there is
no order of assessment passed in such a case. When there is no lis,
speaking order is not required to be passed in “across the counter affair”.
32. Coming to the procedure of assessment of duty as prevailed before the
amendment of the Act prior to the amendment made in section 17(1) by the
Finance Act of 2011, the imported goods or exported goods were required to
be examined and tested by the proper officer. After such examination, he
had to make an assessment of the duty, if any, leviable on these goods.
Under subsection (3) of section 17, the proper officer was authorized to
require the importer, exporter or any other person to produce any contract,
broker’s note or any other document as specified in the proviso and to
furnish any required information. Notwithstanding that the statements
made in the bill of entry relating thereto and the documents produced and
the information furnished under subsection (3); but if it was found
subsequently on examination or testing of the goods or otherwise that any
statement in such bill of entry or document or any information so furnished
was not true, he could have proceeded to reassess the duty. Where the
assessment done under subsection (2) is contrary to the claim of the
importer or exporter regarding valuation of the goods, classification,
exemption or concession, speaking order shall be passed within 15 days
from the date of assessment of the bill of entry or the shipping bill as the
case may be as provided in section 17(5).
33. Under the provisions of section 17 as amended by Finance Act of
2011, section 17(1) has provided to selfassess the duty if any leviable on
such goods by importer or exporter as the case may be. Selfassessment is
an assessment as per the amended definition of section 2(2). It is further
provided that proper officer may verify the selfassessment of such goods,
and for this purpose, examine or test any imported goods or exported goods
or such part thereof as may be necessary. The power to verify self
assessment lies with the proper officer and for that purpose under section
17(3), he may require the importer, exporter or any other person to produce
such document and furnish such information, etc. If the proper officer on
verification has found on examination or testing of the goods or as part
thereof or otherwise that the selfassessment is not done correctly, the
proper officer may, without prejudice to any other action which may be
taken under the Act, may proceed to reassess the duty leviable on such
goods. Section 17(5) of the Act as amended provides that where re
assessment done under subsection 17(4) is contrary to the assessment
done by the importer or exporter regarding the matters specified therein, the
proper officer has to pass a speaking order on the reassessment, within 15
days from the date of reassessment of the bill of entry or the shipping bill,
as the case may be. The explanation to amended section 17 has clarified
that import or export before the amendment by Finance Act, 2011 shall be
governed by unamended provisions of section 17.
34. Section 18 deals with the provisional assessment of duty where the
importer or exporter is unable to make selfassessment or the proper officer
deem it necessary to subject any imported or export goods to any chemical
or other tests; or where further inquiry is deemed necessary by the proper
officer.
35. Section 27 of the Act prior to amendment by Finance Act, 2011
provided for refund procedure. Any person could claim a refund of duty and
interest if any paid on such duty. Refund of duty and interest if any paid
pursuant to the order of assessment or borne by him, may make an
application for refund of such duty to the Assistant Commissioner of
Customs or Deputy Commissioner of Customs within one year in the case of
any import made by any individual for his personal use or by Government
or by any educational, research or charitable institution or hospital. In any
other case before the expiry of six months from the date of payment of duty
and interest. He has to further satisfy that he has not passed on such
liability to any other person. The limitation of one year or six months shall
not apply where any duty and interest has been paid under protest. It is
made clear by the second proviso to section 27 that in case of refund
becomes necessary as a consequence of judgment, decree, order or direction
of the appellate authority, Appellate Tribunal or any court, the limitation of
one year or six months shall commence from the date of such judgment,
decree, order or direction.
36. Section 27 of the Customs Act as amended by Finance Act, 2011
provides that any person claiming refund of any duty or interest paid or
borne by him, may make an application in such form and manner as may
be prescribed for such refund to the Assistant or Deputy Commissioner of
Customs before the expiry of one year from the date of payment of such
duty or interest. If an application for refund has been made before Finance
Bill received the assent of the President, it is deemed to be filed under the
provision of section 27 (1) as existed and to be dealt with under section
27(2). The period of limitation of one year provided by the provisions of
section 27 has to be computed in the case of goods which are exempt from
payment of duty by a special order issued under section 25(2) from the date
of issue of such an order as provided in section 27(1B)(a). Where the duty
becomes refundable as a consequence of any judgment, decree, order or
direction of the appellate authority, Appellate Tribunal or any Court, the
limitation of one year shall be computed from the date of such judgment,
decree, order or direction. It is provided in Section 27(1B)(c) that where any
duty is paid provisionally under Section 18, the limitation of one year shall
be computed from the date of adjustment of duty after the final assessment
thereof or in the case of reassessment, from the date of such re
assessment. The second proviso to section 27 makes it clear that limitation
of 1 year shall not apply where any duty or interest has been paid under
protest.
37. Under Section 27(2)(a) it is incumbent upon the applicant to satisfy
that the amount of duty or interest of which refund has been claimed, had
not been passed by him to any other person, the provision aims at preventing unjust enrichment.
38. No doubt about it that the expression which was earlier used in
Section 27(1)(i) that “in pursuance of an order of assessment” has been
deleted from the amended provision of Section 27 due to introduction of
provision as to selfassessment. However, as selfassessment is nonetheless
an order of assessment, no difference is made by deletion of aforesaid
expression as no separate reasoned assessment order is required to be passed in the case of selfassessment as observed by this Court in Escorts
Ltd. v. Union of India & Ors. (supra).
39. In Collector of Central Excise, Kanpur v. Flock (India) Pvt. Ltd . 2000
(120) ELT 285 (SC)= (2000) 6 SCC 650, the question which came up for
consideration before this Court was nonchallenge of an appealable order
where the adjudicating authority had passed an order which is appealable
under the statute, and the party aggrieved did not choose to file an appeal.
This Court held that it is not open to the party to question the correctness
of the order of the adjudicating authority subsequently by filing a claim for
refund on the ground that the adjudicating authority had committed an
error in passing the order. The provisions of the Central Excise Act, 1944
came up for consideration. The Court has observed:
“10. Coming to the question that is raised, there is little scope for doubt that in a case where an adjudicating
authority has passed an order which is appealable under the
statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the
party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for
refund on the ground that the adjudicating authority had
committed an error in passing its order. If this position is
accepted then the provisions for adjudication in the Act and
the Rules, the provision for appeal in the Act and the Rules
will lose their relevance and the entire exercise will be rendered redundant. This position, in our view, will run counter to the scheme of the Act and will introduce an element of uncertainty in the entire process of levy and collection of excise duty. Such a position cannot be countenanced. The view was taken by us also gains support
from the provision in subrule (3) of Rule 11 wherein it is laid
down that whereas a result of any order passed in appeal or
revision under the Act, refund of any duty becomes due to
any person, the proper officer may refund the amount to such person without his having to make any claim in that
behalf. The provision indicates the importance attached to an
order of the appellate or revisional authority under the Act.
Therefore, if an order which is appealable under the Act is
not challenged then the order is not liable to be questioned
and the matter is not to be reopened in a proceeding for the
refund which, if we may term it so, is in the nature of execution of a decree/order. In the case at hand, it was specifically mentioned in the order of the Assistant Collector
that the assessee may file an appeal against the order before
the Collector (Appeals) if so advised.”
(emphasis supplied)
40. In Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive)
2004 (172) ELT 145 (SC)= (2005) 10 SCC 433, the Court considered
unamended provision of Section 27 of the Customs Act and a similar
submission was raised which was rejected by this Court observing that so
long as the order of assessment stands, the duty would be payable as per
that order of assessment. This Court has observed thus:
“6. We are unable to accept this submission. Just such a
contention has been negatived by this Court in Flock (India)
case (2000) 6 SCC 650. Once an order of assessment is passed the duty would be payable as per that order. Unless
that order of assessment has been reviewed under Section 28 and/or modified in an appeal, that order stands. So long
as the order of assessment stands the duty would be payable as per that order of assessment. A refund claim is not an
appeal proceeding. The officer considering a refund claim
cannot sit in appeal over an assessment made by a
competent officer. The officer considering the refund claim cannot also review an assessment order.
7. We also see no substance in the contention that provision
for a period of limitation indicates that a refund claim could
be filed without filing an appeal. Even under Section 11
under the Excise Act, the claim for refund had to be filed
within a period of six months. It was still held, in Flock
(India)’s case (supra), that in the absence of an appeal having
been filed no refund claim could be made.
8. The words “in pursuance of an order of assessment” only
indicate the party/person who can make a claim for refund.
In other words, they enable a person who has paid duty in pursuance of an order of assessment to claim the refund. These words do not lead to the conclusion that without the order of assessment having been modified in appeal or reviewed a claim for refund can be maintained.”
(emphasis supplied)
41. It is apparent from provisions of refund that it is more or less in the
nature of execution proceedings. It is not open to the authority which
processes the refund to make a fresh assessment on merits and to correct
assessment on the basis of mistake or otherwise.
42. It was contended that no appeal lies against the order of self
assessment. The provisions of Section 128 deal with appeals to the
Commissioner (Appeals). Any person aggrieved by any decision or order may
appeal to the Commissioner (Appeals) within 60 days. There is a provision
for condonation of delay for another 30 days. The provisions of Section 128
are extracted hereunder:
“128. Appeals to [Commissioner (Appeals)]. (1) Any
person aggrieved by any decision or order passed under this
Act by an officer of customs lower in rank than a [Principal
Commissioner of Customs or Commissioner of Customs] may
appeal to the [Commissioner (Appeals)] [within sixty days] from the date of the communication to him of such decision
or order:
[Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause
from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of
thirty days.]
[(1A) The Commissioner (Appeals) may, if sufficient cause is
shown, at any stage of hearing of an appeal, grant time, from
time to time, to the parties or any of them and adjourn the
hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.]
(2) Every appeal under this section shall be in such form and
shall be verified in such manner as may be specified by rules
made in this behalf.”
43. As the order of selfassessment is nonetheless an assessment order
passed under the Act, obviously it would be appealable by any person
aggrieved thereby. The expression ‘Any person’ is of wider amplitude. The
revenue, as well as assessee, can also prefer an appeal aggrieved by an
order of assessment. It is not only the order of reassessment which is
appealable but the provisions of Section 128 make appealable any decision
or order under the Act including that of selfassessment. The order of self
assessment is an order of assessment as per section 2(2), as such, it is
appealable in case any person is aggrieved by it. There is a specific
provision made in Section 17 to pass a reasoned/speaking order in the
situation in case on verification, selfassessment is not found to be
satisfactory, an order of reassessment has to be passed under section
17(4). Section 128 has not provided for an appeal against a speaking order
but against “any order” which is of wide amplitude. The reasoning employed
by the High Court is that since there is no lis, no speaking order is passed,
as such an appeal would not lie, is not sustainable in law, is contrary to
what has been held by this Court in Escorts (supra).
44. The provisions under section 27 cannot be invoked in the absence of
amendment or modification having been made in the bill of entry on the
basis of which selfassessment has been made. In other words, the order of
selfassessment is required to be followed unless modified before the claim
for refund is entertained under Section 27. The refund proceedings are in
the nature of execution for refunding amount. It is not assessment or re
assessment proceedings at all. Apart from that, there are other conditions
which are to be satisfied for claiming exemption, as provided in the
exemption notification. Existence of those exigencies is also to be proved
which cannot be adjudicated within the scope of provisions as to refund.
While processing a refund application, reassessment is not permitted nor
conditions of exemption can be adjudicated. Reassessment is permitted
only under Section 17(3)(4) and (5) of the amended provisions. Similar was
the position prior to the amendment. It will virtually amount to an order of
assessment or reassessment in case the Assistant Commissioner or Deputy
Commissioner of Customs while dealing with refund application is
permitted to adjudicate upon the entire issue which cannot be done in the
ken of the refund provisions under Section 27. In Hero Cycles Ltd. v. Union of India 2009 (240) ELT 490 (Bom.) though the High Court interfered to
direct the entertainment of refund application of the duty paid under the
mistake of law. However, it was observed that amendment to the original
order of assessment is necessary as the relief for a refund of claim is not available as held by this Court in Priya Blue Industries Ltd. (supra).
45. Reliance was also placed on a decision of Rajasthan High Court with
respect to service tax in Central Office Mewar Palace Org. v. Union of India
2008 (12) STR 545 (Raj.). In view of the aforesaid discussion, we are not
inclined to accept the reasoning adopted by the High Court, that too is also
not under the provisions of the Customs Act.
46. The decision in Intex Technologies (India) Ltd. v. Union of India has followed Micromax (supra). The reasoning employed by the High Courts of
Delhi and Madras does not appear to be sound. The scope of the provisions
of refund under Section 27 cannot be enlarged. It has to be read with the
provisions of Sections 17, 18, 28 and 128.
47. When we consider the overall effect of the provisions prior to
amendment and postamendment under Finance Act, 2011, we are of the
opinion that the claim for refund cannot be entertained unless the order of
assessment or selfassessment is modified in accordance with law by taking
recourse to the appropriate proceedings and it would not be within the ken
of Section 27 to set aside the order of selfassessment and reassess the duty
for making refund; and in case any person is aggrieved by any order which
would include selfassessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act.
48. Resultantly, we find that the order(s) passed by Customs, Excise, and
Service Tax Appellate Tribunal is to be upheld and that passed by the High
Courts of Delhi and Madras to the contrary, deserves to be and are hereby
set aside. We order accordingly. We hold that the applications for refund
were not maintainable. The appeals are accordingly disposed of. Parties to
bear their own costs as incurred.
…………………………. J. (Arun Mishra)
…………………………. J. (Navin Sinha)
…………………………. J. (Indira Banerjee)
New Delhi;
September 18, 2019.
