2022 (2) TMI 151 - AT - Customs

Appellate Tribunal CESTAT Ahmedabad Upholds Refund of Rubber Cess

The Appellate Tribunal CESTAT Ahmedabad disposed of the appeals based on directions from the Gujarat High Court, allowing the appellant's claim for refund ... Refund of duty/cess paid under protest - nil assessment of bills of entry - requirement to challenge assessment order before claiming refund - unjust enrichment in refund claims - recovery of sanctioned refund - reliance on accounting records and Chartered Accountant certificate for unjust enrichmentRefund of duty/cess paid under protest - nil assessment of bills of entry - requirement to challenge assessment order before claiming refund - Entitlement to refund of rubber cess paid under protest where the bills of entry were finally assessed at nil and whether the assessee was required to challenge the bills of entry assessment before claiming refund. - HELD THAT: - The Tribunal found that all bills of entry were finally assessed at nil rate of duty and that the rubber cess was subsequently insisted upon by the department and paid by the appellant through separate challans under protest. Where the assessment is nil there is no grievance against the assessment order and therefore no question of challenging the bills of entry arises. The reasoning follows the ratio of SESA GOA LTD. as applied by the Tribunal: the Apex Court decisions relied upon by the revenue presuppose an assessment levying duty which was not appealed; those decisions are inapplicable where the bill of entry shows a nil assessment. Since the rubber cess payment was separate and was not part of any assessed duty in the bills of entry, there was no requirement to challenge the bills of entry before claiming refund of the cess paid under protest, and the sanctioned refunds were rightly awarded.Refund of rubber cess paid under protest is admissible despite nil assessment of the bills of entry; there was no obligation to challenge the bills of entry before claiming refund.Unjust enrichment in refund claims - reliance on accounting records and Chartered Accountant certificate for unjust enrichment - Whether the refund is barred by unjust enrichment where the assessee produced books of account showing the amount as receivable and furnished a Chartered Accountant's certificate. - HELD THAT: - The Tribunal examined the material placed before the refund sanctioning authority and noted that the appellant had not debited the rubber cess to profit and loss but had shown the amount as receivable from the Government in the balance sheet under current assets, supported by a Chartered Accountant certificate and an undertaking. The department produced no evidence to discredit the CA certificate or to show that the incidence of the cess had been passed on. On these facts the Tribunal concluded that the appellant had established absence of unjust enrichment. Consequently the refund sanctioned relying on the accounting entries and CA certificate was legal and proper.The refund is not hit by unjust enrichment on the recorded facts; the assessee's books and CA certificate sufficiently demonstrated non-passage of incidence.Recovery of sanctioned refund - consequential relief on allowance of refund - Validity of the recovery order consequential to denial of refund and whether that recovery should be vacated in view of the Tribunal's findings on refund and unjust enrichment. - HELD THAT: - The recovery order issued by the Principal Commissioner flowed from the Commissioner (Appeals)'s denial of the refund. Having held that the refund was admissible and not barred by unjust enrichment, the Tribunal concluded that the recovery order could not stand. The appeal against the recovery was therefore allowed as consequential relief.The recovery order is set aside; consequential relief follows from the Tribunal's allowance of the refund.Final Conclusion: Impugned orders are set aside. Appeals are allowed: the appellant is entitled to refund of the rubber cess paid under protest, the refund is not barred by unjust enrichment on the facts, and the consequential recovery order is vacated; relief to be given in accordance with law. Issues involved:- Disposal of appeals as per directions from Gujarat High Court- Exemption claim under Notification No. 96/2009-Cus for imported Natural Rubber- Payment of rubber cess under protest and subsequent refund claim- Challenge to assessment order and unjust enrichment- Legal validity of assessment orders and refund claims- Applicability of relevant case laws on assessment orders and unjust enrichmentDetailed Analysis:1. Disposal of Appeals as per High Court Directions:The Tribunal disposed of the appeals based on the directions from the Gujarat High Court to decide the assessee's appeal afresh on merit, setting aside the previous Final Order.2. Exemption Claim and Payment of Rubber Cess:The appellant, engaged in tire manufacturing, imported natural rubber under Advance Licence and claimed exemption under Notification No. 96/2009-Cus. Despite nil assessment of duty on bills of entry, the appellant was required to pay rubber cess in cash, which was done under protest. Subsequently, a refund claim was filed based on the order of Commissioner (Appeals) stating that the cess was not payable.3. Challenge to Assessment Order and Unjust Enrichment:The appellant's counsel argued that the assessment of rubber cess was not paid on the bills of entry and challenged the findings of the Commissioner (Appeals) regarding unjust enrichment. Citing relevant case laws, it was contended that the appellant had not passed on the amount of rubber cess paid, thus justifying the refund claim.4. Legal Validity of Assessment Orders and Refund Claims:The Tribunal noted that since the bills of entry were assessed at nil duty rates, there was no basis for challenging the assessment. The payment of rubber cess separately, not assessed by the department, did not require a challenge to the bills of entry. The Tribunal disagreed with the Commissioner (Appeals) on the requirement to challenge the assessment, supporting the appellant's claim for refund.5. Applicability of Case Laws on Assessment Orders and Unjust Enrichment:Referring to the judgment of the Bombay High Court, the Tribunal emphasized that in cases of nil assessment, challenging the bills of entry for refund was unnecessary. The Tribunal also analyzed the appellant's submission regarding unjust enrichment, concluding that the refund of rubber cess was justified based on the evidence provided.6. Final Decision and Relief Granted:After considering the submissions and records, the Tribunal set aside the impugned orders, allowing the appeals with consequential relief. The refund of rubber cess paid by the appellant was deemed admissible, and the recovery of the refund ordered by the Commissioner (Appeals) was overturned.This comprehensive analysis covers the issues involved in the legal judgment, detailing the arguments presented by both parties, the Tribunal's reasoning, and the final decision rendered by the Appellate Tribunal CESTAT Ahmedabad.