2020 (12) TMI 962 - AT - Customs

Tribunal permits Department to amend appeal grounds regarding Assessment Orders, refund claims.

The Tribunal allowed the Department to add a ground in the appeals regarding the necessity of modifying Assessment Orders before considering refund ... Right of department to file any appeal or cross-objections before the Commissioner (Appeals) - Section 128 of the Customs Act - Deputy Commissioner had sanctioned the refund amount but a direction was given that this amount should be credited to the Consumer Welfare Fund in terms of section 27(2) - HELD THAT:- A perusal of section 128 of the Customs Act shows that any person aggrieved by any decision or order passed under the Act by an officer of customs lower in rank than a Principal Commissioner or Commissioner may appeal to the Commissioner (Appeals). This section does not provide for filing of cross-objections, unlike sub-section of (4) of section 129A of the Customs Act which, in regard to Appeals to the Appellate Tribunal, provides for filing a memorandum of cross-objections against any part of the order appealed against and also provides that such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified. Section 128 of the Customs Act dealing with Appeal to Commissioner (Appeals) provides that any person aggrieved by any decision or order may appeal to the Commissioner (Appeals). The right to file cross-objection is a substantive right conferred by a statue and can be exercised only in accordance with the provisions of the statue. Thus, neither could the Department have filed any appeal against the order of the Deputy Commissioner as it could not have considered itself to be aggrieved by the order since the Deputy Commissioner had not directed for the amount to be paid to Vivo Mobile but had directed to be credited in the Consumer Welfare Fund, nor was it permissible in law for the Department to have filed cross-objections in the appeal filed by the Vivo Mobile before the Commissioner (Appeals) since cross-objections cannot be filed before the Commissioner (Appeals). It is, therefore, more than apparent that the Department could neither have filed an appeal before the Commissioner (Appeals) against a part of the order passed by the Deputy Commissioner nor it could have filed cross-objections in the appeal filed by the Vivo Mobile before the Commissioner (Appeals) against that part of the order sanctioning the refund amount since the right to file cross-objection has not been conferred under section 128 of the Customs Act, which deals with appeal to the Commissioner (Appeals). The appeals may now be listed for hearing on 06 July, 2020. Issues Involved:1. Whether the refund claims could have been entertained without modifying the Assessment Orders.2. Eligibility for the reduced rate of Additional Duty under the notification dated 17 March 2012.3. Necessity of re-assessment of bills of entry for refund claims.4. Whether the refund claims were barred by limitation.5. Whether the incidence of Additional Duty had been passed on to the buyer, leading to unjust enrichment.6. Whether the Department could raise an additional ground in the appeal before the Tribunal.Issue-wise Detailed Analysis:1. Whether the refund claims could have been entertained without modifying the Assessment Orders:The Department filed applications to add a ground in the appeals, arguing that refund claims could not be entertained unless the Assessment Orders were modified as per law. This was based on the Supreme Court’s judgment in ITC Ltd. vs Commissioner of Customs Kolkata-IV, which held that a claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law. The Tribunal allowed the Department to raise this additional ground, noting that the issue would be decided on merits at the time of hearing the appeal.2. Eligibility for the reduced rate of Additional Duty under the notification dated 17 March 2012:Vivo Mobile claimed eligibility for a reduced Additional Duty rate of 1% under condition no. 16 of the notification dated 17 March 2012, similar to the condition examined by the Supreme Court in SRF Ltd. vs Commissioner of Customs, Chennai. The Deputy Commissioner agreed with this claim, referencing the Supreme Court’s decision in SRF Ltd., which held that the condition for reduced duty was satisfied if no CENVAT credit was availed.3. Necessity of re-assessment of bills of entry for refund claims:The Deputy Commissioner, relying on the Delhi High Court’s decision in M/s. Micromax Informatics Ltd. vs. Union of India, held that it was not necessary for Vivo Mobile to seek re-assessment of the bills of entry for the refund claims. This decision was later challenged by the Department, but the Tribunal noted that the Supreme Court in ITC Ltd. had reversed the Delhi High Court’s judgment, necessitating a review of this issue.4. Whether the refund claims were barred by limitation:The Deputy Commissioner found that the refund applications filed by Vivo Mobile were within the time limit. This aspect was not contested further in the appeals.5. Whether the incidence of Additional Duty had been passed on to the buyer, leading to unjust enrichment:The Deputy Commissioner initially held that Vivo Mobile had failed to prove that the incidence of Additional Duty had not been passed on to the buyers, leading to unjust enrichment. Thus, the refund amount was directed to be credited to the Consumer Welfare Fund. However, the Commissioner (Appeals) reversed this decision, finding that the incidence had not been passed on and directed the refund to be paid to Vivo Mobile. This decision was later contested by the Department, arguing that the Commissioner (Appeals) had not adequately addressed the issue of unjust enrichment.6. Whether the Department could raise an additional ground in the appeal before the Tribunal:The Tribunal allowed the Department to raise an additional ground in the appeals, based on the Supreme Court’s judgment in ITC Ltd. This decision was made in light of the principles laid down by the Tribunal in Gannon Dunkerley & Co. Ltd. vs Commissioner of Central Excise and Service Tax (ADJ), New Delhi, which allowed for the inclusion of additional grounds in appeals under specific circumstances.Conclusion:The Tribunal granted the Department leave to add an additional ground in the appeals concerning the necessity of modifying the Assessment Orders before entertaining refund claims. This issue, along with the others, would be decided on merits during the hearing of the appeals. The Tribunal emphasized that the decision to allow the additional ground did not imply a resolution in favor of the Department, and all issues would be thoroughly examined during the appeal hearing scheduled for 06 July, 2020.