2023 (4) TMI 1204 - AT - Customs

Importer's Refund Claim Upheld for SAD Dispute

Commissioner of Customs (Air) Versus M/s. Dimension Data India Limited

The case involved a dispute over the rejection of a refund claim for Special Additional Duty (SAD) under the Customs Tariff Act, 1975. The Commissioner ... Refund of SAD - rejection on the ground that the respondent being eligible to claim benefit of exemption Notification No.29/2010 for goods, ought to have sought for reassessment and filed refund claim under Section 27 of Customs Act, 1962 instead of filing claim under notification 102/2007 - some part of Bill of Entry rejected on the ground that the goods imported and sold against the sale invoices were not tallying - denial of some part also on the ground that the goods were sold on the same date of import as per the sales invoices, while actually the goods were physically removed from Air Cargo Customs only on the next day. Rejection on the ground that Bill of Entry in regard to RSP based assessed goods has to be reassessed and refund claim has to be filed for the CVD paid by respondent under Section 27 of the Customs Act, 1962 - HELD THAT:- As per Notification No.102/2007 the scheme of exemption is by way of refund. The importer has to pay the duty (CVD) and then file refund claim when the goods have been sold in domestic market by paying VAT / Sales Tax. The scheme of exemption under notification No.102/2007 being in the nature of refund after payment of duty, it cannot be insisted that reassessment is required while filing refund. It may be true that respondent is eligible for benefit of Notification No.29/2010 by which they do not have to pay the CVD at the time of import. But however, the respondent has chosen not to avail this benefit and paid the duty (CVD). The respondent has then filed refund claim of the duty paid by them (CVD/SAD) in terms of notification no.102/2007 - The Department cannot insist that the importer should avail benefit of a particular notification when they are eligible for different notifications of the same duty of CVD / SAD. The case is a refund claim filed in terms of Notification No.102/2007 wherein the scheme is of refund only after payment of duty. In other words, one of the conditions that has to be fulfilled for claiming refund under Notification No.102/2007 is that the importer has to pay the CVD at the time of import of the goods. The assessment therefore is in order and does not require reassessment. There is no excess duty paid. For these reasons, the reliance placed by Ld A.R on the decisions is not applicable to the facts of the case. Though the respondent may be eligible for benefit of CVD in terms of Notification No.29/2010, it is their option to avail or not to avail the exemption. They have later claimed refund of the CVD paid by them. The original authority has rejected part of the refund claim in regard to some of the goods for which the benefit of notification 29/2010 would be applicable, and held that without reassessment refund claim cannot be sanctioned as they are eligible for benefit of notification No.29/2010. This view does not find favour in the present case. The view taken by the Commissioner (Appeals) is legal and proper - There are no grounds to interfere with the impugned order - Appeal filed by Revenue dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether an importer who paid CVD at import and thereafter filed a refund claim under a notification whose scheme is refund-after-payment (Notification No.102/2007) is required to seek reassessment under Section 27 of the Customs Act because the same goods would have been eligible for exemption at import under a different notification (Notification No.29/2010). 2. Whether the decision in Priya Blue Industries (Supra) and the Tribunal's decision in National Institute of Ocean Technology (Supra) mandate reassessment before sanctioning a refund where an importer did not avail an at-import exemption but paid duty and later claimed refund. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Requirement of reassessment where importer paid CVD and claimed refund under a refund-based notification Legal framework: The refund scheme under the relevant notification operates by permitting refund of CVD/SAD after the importer has paid the duty and subsequently sold the goods in the domestic market (i.e., a refund-after-payment mechanism). Section 27 of the Customs Act provides for reassessment of duty where necessary. Precedent treatment: The adjudicating authority applied a principle that reassessment is necessary if an importer was eligible for an exemption at import but did not invoke it; that approach drew on Priya Blue Industries (Supra). The Commissioner (Appeals) and the Tribunal distinguished that approach when the statutory scheme before them is one of refund-after-payment. Interpretation and reasoning: Where a notification expressly furnishes relief by way of refund only after duty payment, the statutory scheme contemplates initial payment followed by a refund application; the assessment, therefore, is complete and valid at the time of import. The availability of an alternative at-import exemption does not automatically render the assessment void or necessitate reassessment when the importer consciously chose the refund route. The Department cannot compel an importer to elect an at-import exemption when the law provides alternate, legitimate routes to obtain relief (i.e., immediate exemption versus post-import refund). Reassessment under Section 27 is directed at correcting incorrect assessments or to give effect to lawful relief not availed due to error; it is not a prerequisite to deny a refund where the refund scheme's conditions have been met and the assessment itself is in order. Ratio vs. Obiter: The holding that reassessment is not required where refund is sought under a notification whose scheme is refund-after-payment (and assessment was otherwise in order) is ratio decidendi for the matter before the Tribunal. Observations contrasting this position with fact patterns involving at-import exemptions or EDI/system failures (see Issue 2) are explanatory and constitute obiter as to different factual matrices. Conclusion: Reassessment under Section 27 is not a precondition to sanction refund claims filed under a refund-based notification when (i) the importer paid the duty at import, (ii) the assessment is in order, and (iii) the statutory conditions for refund have been satisfied. The Commissioner (Appeals)'s sanction of the refund on this ground is sustained. Issue 2 - Applicability of Priya Blue Industries and National Institute of Ocean Technology precedents Legal framework: Judicial precedents must be applied according to their factual matrix and the specific statutory scheme engaged in each case. Distinguishing precedent is appropriate where material facts or the legal mechanism for relief differs. Precedent Treatment: The decision in Priya Blue Industries was relied upon by the Revenue to assert that reassessment is required where an importer could have availed an exemption but did not. The Tribunal distinguished Priya Blue on the ground that it does not concern a refund-based scheme where payment at import and subsequent refund are expressly contemplated. The National Institute of Ocean Technology decision was also found distinguishable because that case involved notification benefits that exempted duties at import (both BCD and CVD) and factual circumstances (EDI system failure) where the original assessment was found premature for refund without reassessment. Interpretation and reasoning: Priya Blue and similar authorities address situations where the correctness of assessment is in question because an at-import exemption should have been applied at the time of entry; such cases entail reassessment to rectify the original assessment. By contrast, where the statutory relief is structured as a refund following payment (and the refund claimant satisfies the notification's conditions), the assessment is not defective merely because an alternate at-import route existed. Similarly, cases involving EDI/system failures or notifications exempting duty at import are factually distinct and do not control when the statutory mechanism expressly contemplates payment-then-refund. Ratio vs. Obiter: The Tribunal's distinction of the cited precedents is ratio relative to the present factual and legal context - it establishes that those authorities do not compel reassessment where the refund-notification framework applies. Any statements about the limited applicability of those precedents to other fact patterns are obiter with respect to different circumstances. Conclusion: Reliance on Priya Blue Industries and National Institute of Ocean Technology is misplaced in the present context; those decisions are distinguishable on their facts and do not mandate reassessment prior to sanctioning refunds under a refund-after-payment notification. Ancillary conclusions and disposition The Commissioner (Appeals)'s conclusion that the original authority erred in rejecting the refund on the ground that bills of entry required reassessment is legally sound. Where the refund notification's conditions are fulfilled and the assessment was validly made with duty paid, the refund claim is maintainable without prior reassessment. Accordingly, the departmental appeal against the order allowing the refund is dismissed and the impugned order is sustained.