2020 (4) TMI 840 - AT - Customs

Tribunal rules in favor of respondents, allowing refund of sugar cess on imported raw sugar.

The Tribunal upheld the Commissioner (Appeals) decision, ruling in favor of the respondents, dismissing the department's appeal regarding the eligibility ... Refund of duty paid under protest - reassessment of Bill of Entry after protest - cess vis-a -vis duty of excise - binding effect of Board circularRefund of duty paid under protest - reassessment of Bill of Entry after protest - Whether marking protest at the time of payment of duty on Bill of Entry precludes refund in absence of a separate request for reassessment and whether decisions requiring reassessment apply. - HELD THAT: - The Tribunal held that marking a protest at the time of payment of duty on the Bill of Entry conveys to the department that reassessment is required and therefore the assessment under Section 17 of the Customs Act cannot be treated as final. Where protest is duly marked, the department is expected to initiate proceedings to vacate the protest and pass a speaking order for reassessment; failure to do so cannot be used to deny a refund claim. Accordingly, precedents relied upon by the department to the effect that a taxpayer must seek reassessment (where duties were paid voluntarily without protest) are not applicable to the present facts where payment was made under protest. [Paras 7]Marking protest while paying duty on the Bill of Entry prevents the assessment from being treated as final and the respondents are not disentitled to claim refund on that ground.Cess vis-a -vis duty of excise - binding effect of Board circular - Whether sugar cess paid on imported raw sugar is leviable (i.e., constitutes a duty of excise) or is not leviable on imports in view of the Board's clarification that such cess is not a duty of excise. - HELD THAT: - The Commissioner (Appeals) relied on earlier tribunal decisions and on the Board's letter dated 10.08.2004 which clarified that certain cesses (including sugar cess) are not duties of excise, even if collected by the Department of Revenue. The Tribunal accepted that, notwithstanding contrary decisions treating sugar cess as a duty of excise, the Board's clarification is binding on the department and that sugar cess is levied by the Ministry of Consumer Affairs and not as an excise duty by the Ministry of Finance. Applying that reasoning, the Tribunal concluded that sugar cess is not leviable on imported raw sugar and thus the respondents' payment of sugar cess on import was refundable. [Paras 8, 9]Sugar cess is not a duty of excise for the purposes of levy on imported raw sugar and the cess paid on import is eligible for refund in the facts of this case.Final Conclusion: The departmental appeal is dismissed; respondents' refund claim is sustainable because protest at the time of payment precluded finalisation of assessment and sugar cess is not leviable on imported raw sugar in view of the Board's clarification. Issues:1. Eligibility for refund of sugar cess paid on imported raw sugar.2. Applicability of Priya Blue Industries Ltd. VS CC (Preventive) and ITC Ltd. Vs CCE Kolkata judgments.3. Whether the sugar cess paid by the respondent is eligible for refund.Issue 1:The case involved a dispute regarding the eligibility for a refund of sugar cess paid on imported raw sugar by the respondents, who are sugar manufacturers. The original authority rejected the refund claim, stating that the exemption notification does not apply to the appellant's claim and that since the assessment was not challenged, they were not eligible for a refund. The Commissioner (Appeals) later held that the appellants were indeed eligible for a refund, leading to this appeal.Issue 2:The department argued that sugar cess is collected on imported raw sugar as part of additional customs duty, equivalent to Central Excise duty. They contended that there were no statutory provisions exempting sugar cess on imported sugar during that period. The department further cited judgments related to reassessment requests and finalized assessments, asserting that the refund claim was not sustainable.Issue 3:The respondent argued that they paid sugar cess under protest on imported raw sugar, which was used to manufacture sugar and subjected to Central Excise duty. They highlighted that the department did not initiate proceedings despite the protest during payment. The respondent contended that sugar cess is not payable on imported sugar, citing relevant tribunal cases and a CBEC letter. The Commissioner (Appeals) agreed with this argument, emphasizing that the sugar cess is not a duty of excise, as clarified by the Board in a letter. The Tribunal upheld the Commissioner's decision, dismissing the department's appeal for lacking merit.In conclusion, the judgment addressed the eligibility for a refund of sugar cess paid on imported raw sugar, considering arguments related to statutory provisions, reassessment requests, and the nature of sugar cess as a duty of excise. The Tribunal ultimately upheld the Commissioner (Appeals) decision, ruling in favor of the respondents and dismissing the department's appeal.