2016 (2) TMI 1048 - AT - Customs

Imported goods duty refund appeal denied due to scheme cessation; excess credit restoration not possible

The appeal by M/s Jindal Exports Ltd for a refund of excess duty was rejected. The consignments were imported under a duty entitlement pass book scheme, ... Refund of excess duty - duty entitlement passbook scheme - exemption notification as procedural debit mechanism - debit in passbook not constituting payment of duty - restoration of credit under passbook scheme - effect of setting aside assessment on refund entitlementRefund of excess duty - duty entitlement passbook scheme - debit in passbook not constituting payment of duty - effect of setting aside assessment on refund entitlement - Claim for refund of alleged excess duty debited in a passbook under the duty entitlement passbook scheme was not maintainable because the debit under the scheme did not amount to payment of duty. - HELD THAT: - The amounts in question represented debits in the passbook maintained under the Foreign Trade Policy's duty entitlement passbook scheme, operationalised by exemption notification. The Tribunal held that availment of an exemption notification which institutionalises a procedural debit cannot be treated as actual payment of duty. Consequently, even though the assessment/order of the first appellate authority was set aside, that consequence did not convert the passbook debit into a paid duty entitling the appellant to a refund. At best, the appellant could seek restoration of the credit that had been utilised, but given that the passbook scheme is no longer in operation and any restoration would not benefit the appellant, no relief accrues. The lower authorities therefore correctly rejected the refund claim and their orders required no interference.Refund claim rejected and appeal dismissed.Final Conclusion: The Tribunal dismissed the appeal, holding that debits under the duty entitlement passbook mechanism do not constitute payment of duty and therefore do not give rise to a refundable excess on assessment being set aside; restoration of passbook credit was not a viable or beneficial remedy. Issues:1. Appeal against rejection of claim for refund of excess duty in consequence of assessment of bill of entry.2. Interpretation of duty entitlement pass book scheme and exemption notification.3. Determination of eligibility for refund of excess duty paid.4. Consideration of operational functioning of the scheme in the Foreign Trade Policy.5. Restoration of credit utilized in excess towards grant of exemption of duty foregone.Analysis:The appeal was filed by M/s Jindal Exports Ltd against the rejection of their claim for a refund of excess duty following the assessment of two bills of entry. The consignments of 'cigarette lighters' were imported under the duty entitlement pass book scheme by availing notification no. 104/95. The duty foregone was debited in a passbook, and the unit price in the bills of entry was increased. The Commissioner of Customs (Appeals) set aside the assessment order, leading the appellant to seek a refund of the excess duty. However, the original authority found that the appellant failed to prove that the duty incidence was not passed on, and as there was no actual payment of duty, the refund claim was rejected. The first appellate authority upheld this decision.During the hearing, it was noted that the duty claimed to be paid in excess was actually a debit in the passbook under a scheme in the Foreign Trade Policy. The scheme operated by granting an exemption through notification no. 104/95. The tribunal determined that availing an exemption notification involving a debit for operational purposes cannot be equated to payment of duty. Therefore, setting aside the first appellate authority's order did not entitle the appellant to a refund. The appellant could only claim a restoration of the excess credit utilized towards the duty exemption, which was now redundant due to the scheme's discontinuation. Consequently, no relief would benefit the appellant, justifying the rejection of the refund claim by the lower authorities.In conclusion, the tribunal rejected the appeal, emphasizing that the restoration of credit would not benefit the appellant as the passbook scheme was no longer in effect. The decision was pronounced in court on 07/02/2017.