2016 (7) TMI 467 - CGOVT - Customs

Government Denies Refund Due to Rule Inapplicability; Commissioner Error Overturned

Commissioner of Customs, Tuticorin-628004 Versus M/s Sudhama Hosieries, New Tirupur.

Commissioner of Customs, Tuticorin-628004 Versus M/s Sudhama Hosieries, New Tirupur. - 2016 (343) E.L.T. 899 (G. O. I.) Issues Involved:1. Refund claim under Rule 16(4) of the Customs, Central Excise and Service Tax Drawback Rules, 1995.2. Applicability of Rule 16A(4) after the amendment by Notification No.49/2010-Cus (NT) dated 17.06.2010.3. Finality of the Order-in-Original and its implications on the refund claim.4. Department's failure to raise certain grounds before the Commissioner (Appeals).Issue-wise Detailed Analysis:1. Refund Claim under Rule 16(4):The respondent exported goods under the duty drawback scheme and was initially sanctioned the drawback amount. However, due to the failure to produce proof of export realization, a demand was raised for the repayment of the drawback amount along with interest and penalty. The respondent complied and repaid the amount. Subsequently, upon obtaining the necessary certificates proving export realization within the stipulated time, the respondent filed a refund claim under Rule 16(4). The lower authority rejected the refund claim on procedural grounds, which was later set aside by the Commissioner (Appeals), leading to the department's revision application.2. Applicability of Rule 16A(4) Post-Amendment:The department argued that Rule 16A(4) had been amended to require the submission of proof of export realization within three months from the date of realization, extendable by nine months upon application. The respondent failed to submit the proof within this period. The government noted that the amended Rule 16A(4) applies specifically when sale proceeds are realized after the recovery of the drawback amount. In this case, the export proceeds were realized before the recovery, making Rule 16A(4) inapplicable.3. Finality of the Order-in-Original:The original authority's order demanding the repayment of the drawback amount had become final as the respondent did not appeal against it and had paid the confirmed dues. The government held that since the order had attained finality, the question of any refund of the paid amount does not arise. This finality precludes the refund claim under the cited rule.4. Department's Failure to Raise Grounds Before Commissioner (Appeals):The respondent contended that the department did not raise the ground of the amended Rule 16A(4) before the Commissioner (Appeals) and did not file any cross-objections or submissions during the personal hearing. The government observed that the basic issue was the admissibility of the refund under the said rule, and the department's failure to raise specific grounds earlier does not preclude them from contesting the refund claim before the revisionary authority.Conclusion:The government concluded that no refund is admissible under Rule 16A(4) of the Customs, Central Excise and Service Tax Drawback Rules, 1995, as the amended rule was inapplicable to the facts of the case. The Commissioner (Appeals) erred in holding the refund as admissible based on the production of Bank Realization Certificates within one year from the date of recovery. The original order demanding the repayment of the drawback amount had attained finality, negating the possibility of a refund. Consequently, the impugned Order-in-Appeal was set aside, and the revision application was allowed.