2021 (7) TMI 343 - HC - Customs

High Court stays EDD refund demand notice pending CESTAT appeal

The Madras High Court ruled that the demand notice for the Extra Duty Deposit (EDD) refund should be stayed until the petitioner's appeal before the ... Reopening of assessment - Recovery of Refund of Extra Duty Deposit (EDD) - HELD THAT:- The issues relating to the import period from 1997- 2002 and the EDD deposit made were refunded pursuant to the orders passed by the CESTAT. When such a refund is made and the petitioner also received the refund amount, thereafter, the Show Cause Notice was issued for the imported period from 2006-2010. Based on the same principles, the petitioner filed the appeal before the CESTAT and the said appeal is pending, and the petitioner made a pre-deposit, as required under the statute. The Board also issued a Circular dated 16.09.2014 that if an opinion is formed that the EDD was erroneously refunded as the matter is pending before the CESTAT, the demand cannot be made till the issues are settled by passing a final order - In the present case, admittedly, the CESTAT Appeal is pending. This being the factum, this Court is of the opinion that the impugned order issued on 08.01.2013 ought not to have issued by the respondents and they should have waited till the disposal of the CESTAT Appeal filed by the petitioner, which is pending. The impugned demand notice issued by the 4th respondent is kept in abeyance till the disposal of the CESTAT Appeal filed by the petitioner - Petition disposed off. Issues:Challenge to demand notice for Extra Duty Deposit (EDD) refund; Review and reopening of EDD refund claim; Finality of CESTAT order; Erroneous refund made by the Department; Connection between pending appeal and demand notice issuance; Interpretation of Circular No.984/2014-CX.Issue 1: Challenge to demand notice for EDD refund:The petitioner challenged the demand notice issued by the 4th Respondent regarding the Extra Duty Deposit (EDD) refund. The petitioner, M/s. Hyundai Motor India Limited, established with approval from the Foreign Investment Promotion Board, Government of India, contested the issuance of the impugned notice dated 08.01.2013. The petitioner's business transactions and importing of goods were not disputed by the respondents.Issue 2: Review and reopening of EDD refund claim:The petitioner contended that the claim for EDD refund, made in proceedings dated 04.12.2012, was being reviewed and reopened through the impugned order. Previous adjudication by the Commissioner of Customs (Appeals) and the subsequent CESTAT order in 2007 were cited to support the petitioner's position. The CESTAT allowed the petitioner's appeal, setting aside the Commissioner's finding and granting consequential relief.Issue 3: Finality of CESTAT order:The petitioner received the EDD refund amount following the final CESTAT order, which became conclusive as the Department did not file any appeal against it. However, the 4th respondent issued a notice on 08.01.2013, claiming the refund was erroneous and needed to be retained until the issue was finalized.Issue 4: Erroneous refund made by the Department:The Department claimed that the EDD refund made to the petitioner was erroneous, citing suppressed information and undervaluation of goods. The Department asserted its authority under the Customs Act, 1962, to recover amounts erroneously refunded, as per the show cause notice issued by the Directorate of Revenue Intelligence.Issue 5: Connection between pending appeal and demand notice issuance:The petitioner's pending appeal before the CESTAT for the period 2006-2010 raised concerns about the Department's issuance of the demand notice for the same period. The petitioner argued that the Circular No.984/2014-CX prohibited the recovery of amounts during the pendency of appeals if pre-deposit requirements were met.Issue 6: Interpretation of Circular No.984/2014-CX:The petitioner relied on Circular No.984/2014-CX to argue against the Department's claim for the return of the EDD refund. The Circular outlined guidelines for the recovery of amounts during appeal pendency, emphasizing the need for a final order before initiating recovery actions.In conclusion, the Madras High Court held that the impugned demand notice for the EDD refund was to be kept in abeyance until the disposal of the petitioner's appeal before the CESTAT. The Court directed that no coercive action should be taken against the petitioner during this period, allowing the Department to continue proceedings post the CESTAT Appeal's resolution.