2000 (11) TMI 221 - AT - Customs

Tribunal grants refund for 'Cess' on export of Hookha Tobacco Paste

The Tribunal ruled in favor of the appellants, granting their refund claim for 'Cess' collected on the export of 'Hookha Tobacco Paste' in 1993. The ... Refund of tax/cess collected without authority of law - collection ab initio illegal treated as deposit - tobacco cess not leviable on the exported goods - Sections 26 and 27 of the Customs Act not applicable to illegal collection - claim for refund outside scope of statutory refund provisionsRefund of tax/cess collected without authority of law - collection ab initio illegal treated as deposit - Sections 26 and 27 of the Customs Act not applicable to illegal collection - Whether the appellants were entitled to refund of the cess collected at the time of export though the cess was not leviable and had been collected without authority of law, and whether such refund claim could be rejected by invoking Sections 26 and 27 of the Customs Act, 1962. - HELD THAT: - The Tribunal found as a fact that 'Tobacco Cess' was not leviable on the exported Hookha Tobacco Paste and that the sums were collected under protest. The adjudicating authority acknowledged non-levyability but denied refund on the basis that statutory conditions in Sections 26 and 27 of the Customs Act were not satisfied (reimportation/return or notification of a class of applicants). The Tribunal held that collection of the cess was illegal ab initio and therefore must be treated as a deposit made to Customs. Where an impost is collected without authority of law it falls outside the remedial scheme of Sections 26 and 27; the statutory refund mechanisms predicated on lawful levy cannot be used to defeat repayment of amounts wrongly collected. The Tribunal relied on precedent holding that public authorities must return what was wrongly recovered and that illegitimate levies are not to be subjected to limitation or procedural bars applicable to lawful duties, and concluded that the refund claim could not be rejected by invoking Sections 26 and 27. [Paras 5, 6]The Tribunal set aside the orders below and allowed the appeal, holding that the amounts collected as cess without authority of law are refundable as deposits and are outside the scope of Sections 26 and 27 of the Customs Act, 1962, with consequential relief to the appellant.Final Conclusion: Appeal allowed; refunds of the cess collected in 1993, which was held to have been imposed without authority of law, are directed to be given to the appellant as amounts collected illegally and treated as deposits, and the provisions of Sections 26 and 27 of the Customs Act, 1962 cannot be used to deny such refund. Issues:- Entitlement to refund of 'Cess' on export of 'Hookha Tobacco Paste' in 1993.Detailed Analysis:1. Refund Claim and Legal Provisions:The issue revolved around the appellants' claim for a refund of Rs. 3,88,990/- paid as 'Cess' on the export of 'Hookha Tobacco Paste' in 1993. The Customs authorities pressured the appellants to pay the 'Cess' despite their protest, leading to the payment under protest. The appellants later sought clarification from the Tobacco Board, which supported their view. However, the refund applications were rejected by the Assistant Collector citing provisions of the Tobacco Cess Act, 1975, and the Customs Act, 1962.2. Assistant Collector's Decision and Appeals:The Assistant Collector, relying on the Customs Act, held that the refund was not applicable as the goods were not re-imported or returned to the exporter as required by the relevant sections. Two separate Orders-in-Original were issued denying the refund. The Commissioner of Customs, Calcutta upheld these orders, leading to the appeal before the Tribunal.3. Appellant's Arguments and Legal Precedents:The appellant argued that the 'Cess' collected was illegal since it was not leviable under the Agricultural Produce Cess Act, 1940. They contended that the refund should have been granted suo moto by the Commissioner as the amount was wrongly collected. Citing legal precedents like Shiv Shankar Dal Mills and Atul Products Ltd., the appellant emphasized that there was no law of limitation for returning wrongly recovered amounts.4. Tribunal's Decision and Rationale:The Tribunal considered whether the refund claim for the 'Cess' collected without legal authority could be rejected under the Customs Act. It was held that the 'Cess' collection was illegal ab initio and should be treated as a deposit to Customs. Relying on legal precedents, the Tribunal concluded that such refund claims fall outside the scope of the Customs Act provisions invoked by the authorities. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellant.In conclusion, the Tribunal ruled in favor of the appellants, acknowledging the illegality of the 'Cess' collection and granting the refund claim based on the absence of legal authority for the collection. The decision emphasized the inapplicability of certain Customs Act provisions in cases of illegal collections, providing relief to the appellants in this matter.