2014 (12) TMI 403 - HC - Customs

High Court Emphasizes Procedural Fairness in Refund Claim Rejection, Sets Precedent for Customs Review

CADBURY INDIA LIMITED Versus UNION OF INDIA AND COMMISSIONER OF CUSTOMS,

The High Court quashed the rejection of a refund claim for educational cess paid on countervailing duty, emphasizing procedural fairness. The court ... Denial of refund claim - Levy of countervailing duty - petitioner had only produced a Chartered Accountant's certificate to substantiate his claim with regard to the absence of unjust enrichment and had not produced any further document to show the absence of unjust enrichment - Held that:- while the 3rd respondent has chosen not to rely on the certificate of the Chartered Accountant produced by the petitioner, it is evident that the petitioner was not given any further opportunity to produce documents to substantiate the correctness of the said certificate, on the 3rd respondent entertaining a doubt regarding the correctness of the said certificate. I am of the view that if the 3rd respondent had any doubt regarding either the genuineness of the certificate or the correctness of the contents therein, it should have informed the petitioner of the same and given the petitioner an opportunity of producing additional documents to substantiate his claim for refund. That procedure not having been adopted by the 3rd respondent, I am of the view that Ext.P10 order passed by him cannot be legally sustained. - Matter remanded back - Decided in favour of assessee. Issues:Challenge to levy of countervailing duty (CVD) on imported consignment of cocoa beans. Refund claim of educational cess paid on CVD.Analysis:The petitioner challenged the levy of countervailing duty (CVD) on imported cocoa beans. An interim order directed the petitioner to pay customs duty and educational cess on the CVD. Subsequently, the Central Government withdrew the levy of CVD on the consignment imported by the petitioner. The petitioner then sought a refund of the educational cess paid. The Assistant Commissioner of Customs rejected the refund claim citing lack of evidence regarding unjust enrichment. The High Court observed that the rejection was solely based on the petitioner's Chartered Accountant's certificate and no further documents were requested to substantiate the claim. The court emphasized that while a certificate from an accountant is usually sufficient, if doubts arise, authorities should request additional evidence. Since the petitioner was not given an opportunity to provide further documents, the court quashed the rejection order and directed a fresh consideration of the refund claim, allowing the petitioner to present supporting materials to establish the absence of unjust enrichment. The Customs official was instructed to issue a fresh decision within three months after hearing the petitioner.This judgment primarily addresses the procedural fairness in considering a refund claim of educational cess paid on countervailing duty. It emphasizes the need for authorities to allow claimants the opportunity to provide additional evidence if doubts arise regarding the initial documents submitted. The court highlighted the importance of ensuring that the burden of proof regarding unjust enrichment is properly discharged by the claimant. The judgment underscores the principle of natural justice and the right to be heard before making a decision on refund claims. The ruling sets a precedent for Customs officials to thoroughly review refund claims and provide claimants with a fair chance to support their claims with necessary documentation.