2021 (1) TMI 1044 - HC - Customs

Refund claim requires challenging final assessment order. Distinction between refund and appeal proceedings emphasized.

The Supreme Court held that a refund claim cannot be entertained without challenging the final assessment order. The Court emphasized the distinction ... Entitlement of Refund without challenging the order of assessment which has attained finality - Applicability of N/N. 10 of 2006 - HELD THAT:- The Supreme Court in PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [2004 (9) TMI 105 - SUPREME COURT] has held that under Section 27 of the Customs Act, 1962, a claim for refund can be made by any person who had (a) paid duty in pursuance of an order of assessment or (b) a person who had borne the duty. It has further been held that unless the order of assessment can be reviewed under Section 28 of the Act and / or modified in an appeal, that order of assessment stands. The duty would be payable as per the order of assessment. It has also been held that refund claim is not an appeal proceeding and an officer considering a refund claim cannot sit in the appeal over an assessment made by a competent officer and cannot review an order of assessment - In view of the aforesaid enunciation of law, it is evident that a person is not entitled to claim refund of duty without challenging an order of assessment. In the facts of the case, there is no material placed on record to show that there is any challenge made to the assessment order. Applicability of N/N. 10/2006 dated 01.03.2006 - HELD THAT:- In the factual situation of the case and in view of the fact that even though under Entry No.4 of the Tariff Notification, the items mentioned therein are exempted for payment of customs duty, however, until and unless the respondent challenges the order of assessment, he is bound to pay the customs duty as assessed. He is not entitled to the benefit of refund - the substantial question of law is answered in the affirmative and in favour of the revenue. Appeal allowed - decided in favor of appellant. Issues:1. Entitlement to claim refund without challenging the order of assessment.2. Interpretation of Notification No.10 of 2006 regarding customs duty exemption.Entitlement to claim refund without challenging the order of assessment:The case involved an appeal under Section 130 of the Customs Act, 1962, where the revenue challenged the Tribunal's decision granting a refund claim made by the respondent without challenging the original order of assessment. The revenue contended that the Tribunal erred in relying on Notification No.10/2006 dated 01.03.2006. The issue for consideration was whether the respondent could claim a refund without challenging the final assessment order. The Supreme Court precedents highlighted that a refund claim cannot be entertained if the assessment order stands final and unchallenged. Refund proceedings are distinct from appeal proceedings, and the officer considering the refund claim cannot review or modify the assessment order. The Court emphasized that a person must challenge the assessment order to claim a refund. As the respondent did not challenge the assessment order, the Tribunal's decision was deemed contrary to established law, leading to the quashing of the Tribunal's order.Interpretation of Notification No.10 of 2006 regarding customs duty exemption:The Tribunal's reliance on Notification No.10/2006 for granting relief to the respondent was deemed irrelevant by the Court. Despite the exemption provided under Entry No.4 of the Tariff Notification, the respondent was obligated to pay customs duty as assessed unless the assessment order was challenged. The Court reiterated that without challenging the assessment order, the respondent could not avail the benefit of a refund. Consequently, the substantial question of law was answered in favor of the revenue, leading to the quashing of the Tribunal's order. The appeal was allowed, and the impugned order dated 06.09.2017 was set aside.In conclusion, the judgment emphasized the importance of challenging assessment orders to claim refunds and clarified that the benefit of exemptions cannot be availed without disputing the assessment. The Court's decision highlighted the necessity of adhering to legal procedures and established principles while seeking refunds under customs laws.