2014 (9) TMI 621 - AT - Customs

Refund claim dismissed for not challenging assessment order before seeking refund

Nicholas Piramal India Ltd. Versus Commissioner of Customs Airport, Mumbai

The appeal was dismissed as the appellant's refund claim was deemed not maintainable without challenging the assessment order of the Bill of Entry, in ... Denial of refund claim - Bill of Entry was assessed and duty was paid accordingly. - Later on, the appellant realised that they are entitled for exemption under Notification No. 11/97, they were not required to pay duty, they filed refund claim - difference of opinion - Majority decision - Held that:- There was an exemption notification covering the said medicines which was neither brought to the notice of the assessing officer nor claimed by the appellant and the assessing officer assessed the duty without extending the benefit of the said exemption notification. The appellant did not challenge the assessment order nor applied for any reassessment and filed the refund claim without challenging the assessment order. Accidental slip or omission in assessing bill of entry - Held that:- Valuation, classification and rate of duty are very important aspects of assessment and the decision taken during assessment proceedings cannot be considered as accidental slip or omission on the part of the proper officer. Accidental slip or omission will be taking British Pound instead of US$ or like. Mistake in the digits relating to value or rate of duty. In fact, while filing the Bill of Entry invariably the importer or the CHA indicates the value as per the Customs Act, indicates the tariff heading as also the exemptioin notification. The proper officer scrutinizes and checks the claim and thereafter assess the Bill of Entry. The decisioni of the Hon’ble Single Member in the case of G.S. Metalica [2007 (8) TMI 507 - CESTAT, MUMBAI] is, therefore, per incuriam and cannot be applied in other cases. In the case of Shri Hari Chemicals Export Ltd. [2005 (12) TMI 95 - SUPREME COURT OF INDIA], the issue before the Hon’ble Supreme Court was whether merely a wrong mention of statutory provisions can lead to denial of benefit. - in the said case, there was a mistake in mentioning the Rule 56A and Rule 57A and in it is in those circumstances, the Hon’ble Supreme Court has taken the said view. In the present case, there is no such mistake. Another case of quoted is that of Bennet Coleman & Co. Ltd. (2008 (7) TMI 204 - CESTAT BANGLORE). In the said case, there was introduction of additional Duty with effect from 1.3.2006 and during the initial period, there was some confusion regarding applicability of SAD on certain items and the appellant paid the additional duty but immediately (on 10.4.2006) applied for the refund of the same and in those circumstances this tribunal distinguished the case from that of Priya Blue Industries Ltd. (2004 (9) TMI 105 - SUPREME COURT OF INDIA). Sec. 154 of the Customs Act cannot be invoked in the present situation where the assessment was made without extending the benefit of exemption notification and same cannot be called arithmetical, clerical or error arising from accidental slip or omission. - Decided against assessee. Issues Involved:1. Whether the appellant can file a refund claim without challenging the assessment of the Bill of Entry.2. Applicability of Section 154 of the Customs Act, 1962 for rectifying errors in assessment.3. Applicability of the bar of unjust enrichment in the refund claim.Issue-Wise Detailed Analysis:1. Refund Claim Without Challenging Assessment:The core issue was whether the appellant could file a refund claim without challenging the assessment of the Bill of Entry. The appellant argued that they were entitled to an exemption under Notification No. 11/97, which was not considered during the initial assessment. The first appellate authority dismissed the appeal, citing the Supreme Court's decision in Flock (India) Pvt. Ltd., which held that an assessment order must be challenged before a refund can be claimed. The Tribunal referenced multiple cases, including Bennet Coleman & Co. Ltd. and Sesa Goa Ltd., which discussed the responsibility of the assessing officer to correctly assess the goods and the possibility of rectifying errors under Section 154 of the Customs Act. However, the Tribunal concluded that without challenging the assessment order, the refund claim was not maintainable, aligning with the Supreme Court's rulings in Priya Blue Industries and Flock (India) Pvt. Ltd.2. Applicability of Section 154 of the Customs Act, 1962:The appellant contended that the omission to apply the correct rate of duty could be rectified under Section 154 of the Customs Act, which deals with clerical or arithmetical mistakes or errors arising from accidental slips or omissions. The Tribunal examined several cases, including G.S. Metalica and Union of India vs. Aluminium Industries Ltd., which supported the view that such errors could be corrected under Section 154. However, the Tribunal ultimately held that the errors in question did not fall under the scope of Section 154, as they were not clerical or arithmetical mistakes but involved the application of an exemption notification, which required a challenge to the assessment order.3. Bar of Unjust Enrichment:The Tribunal remanded the matter back to the first appellate authority to decide on the applicability of the bar of unjust enrichment. If the bar was not applicable, the first appellate authority was instructed to grant the refund claim. This issue was considered secondary to the primary issue of whether the refund claim was maintainable without challenging the assessment.Separate Judgments by Judges:The judgment included separate opinions from the judicial and technical members of the Tribunal. The judicial member believed that the refund claim could be considered without challenging the assessment, relying on the decisions in G.S. Metalica and Bansal Alloys & Metals Ltd. The technical member disagreed, emphasizing the Supreme Court's rulings in Priya Blue Industries and Flock (India) Pvt. Ltd., which required the assessment order to be challenged before a refund claim could be entertained. The majority decision, aligning with the technical member's view, concluded that the refund claim was not maintainable without challenging the assessment of the Bill of Entry.Final Decision:The appeal filed by the appellant was dismissed based on the majority decision, which upheld that the refund claim was not maintainable without challenging the assessment order.