2025 (3) TMI 71 - AT - Customs

Refund claim not time-barred as limitation period starts from final adjudication date when department appeal dismissed

Indian Oil Corporation Limited Versus Commissioner of Customs-Jamnagar (prev)

CESTAT Ahmedabad held that refund claim was not time-barred as limitation period commenced from final adjudication date (13.10.2015) when department's ... Time limitation of refund claim filed - appellants have failed to prove that incidence of duty has not been passed on as they have not booked/ accounted for the refund claim amount in the relevant financial year - principles of unjust enrichment. Delay in filing the refund claim - HELD THAT:- In case of Provisional Assessment under Section 18 of the Customs Act, the party become entitled for refund only after final assessment, because the provision of Section 18(2) of the Customs Act starts with words “When the duty leviable on such goods is assessed finally”. Further in Sub Section 18 (a) and (b), it has been provided that the amount paid shall be adjusted against the duty finally assessed. In the present case, Bill of Entry was finalized on 15.03.2007 and final assessment was done for the first time on 15.03.2007 after the cut-off date 13.07.2006, after which the doctrine of Unjust Enrichment became applicable. The appellant did not become entitled for a refund on their filing of the Bill of Entry for warehousing but only after it was finalized. After the first final assessment order, the appellant filed an appeal before Commissioner (Appeals) which was allowed vide order dated 03.06.2008. Therefore, assessee became entitled for refund as a result of the order of Commissioner (Appeals) dated 03.06.2008. Therefore, the appellant was bound to get the refund application processed under Section 27 of the Customs Act. Whether the refund application was barred by limitation as it was not filed within the prescribed period mentioned in Section 27 of Customs Act? - HELD THAT:- No doubt the duty paid by the appellant was made refundable by the Commissioner (Appeals) vide order dated 03.06.2008 but the department opted for continuation of the said litigation by filing an appeal before the CESTAT. Once that option got exercised, the final judgment about entitlement of appellant to have the refund of the said duty paid, is the judgement pronounced by CESTAT on 13.10.2015 in the said appeal. Since the appeal of the department was dismissed by CESTAT on 13.10.2015, the entitlement of the appellant to refund of duty paid got finalized only on 13.10.2015. Hence, the relevant date for counting the period of limitation is 13.10.2015. Refund application was filed on 30.11.2015 which is within the limitation period. Hence, learned Commissioner (Appeals) and the first Adjudicating Authority have wrongly held that the refund application was barred by time. Therefore, the refund application filed by the appellant is not barred by limitation. Unjust Enrichment - HELD THAT:- When the Chartered Accountant has given a certificate after verification of accounts and corroborative evidences that the duty incidence has not been passed on to the customers then this certificate should not be brushed aside without any cogent reason and the lower Adjudicating Authority and the learned Commissioner (Appeals) has brushed aside the Chartered Accountant certificate without any cogent reason - it cannot be said that the appellant had added the excess payment of duty paid provisionally on raw material in the cost of final products and burden of duty has been shifted to the end user of the final products manufactured by the appellant. Conclusion - The limitation period for a refund claim should be calculated from the date of the final adjudication of entitlement, and not from an earlier provisional or intermediate order. The refund claim was not barred by limitation and that the doctrine of unjust enrichment did not prevent the refund from being granted. Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:1. Whether the refund claim filed by the appellant was barred by limitation as per Section 27 of the Customs Act, 1962.2. Whether the doctrine of unjust enrichment applied to the refund claim, thus preventing the refund from being granted to the appellant.ISSUE-WISE DETAILED ANALYSIS1. Limitation on Filing Refund ClaimRelevant Legal Framework and Precedents: The case involves the interpretation of Sections 18 and 27 of the Customs Act, 1962. Section 18 pertains to provisional assessment, and Section 27 deals with the claim for refund of duty. The appellant relied on the precedent set in Rayban Sun Optics India Pvt Ltd, which clarified that the limitation period for filing a refund claim should be calculated from the date of the final judgment determining the entitlement to the refund.Court's Interpretation and Reasoning: The Tribunal agreed with the appellant's argument that the limitation period should be counted from the date of the final order by the CESTAT on 13.10.2015, rather than the earlier order by the Commissioner (Appeals) dated 03.06.2008. The Tribunal reasoned that the entitlement to the refund was only finalized with the CESTAT's dismissal of the department's appeal on 13.10.2015.Key Evidence and Findings: The Tribunal noted that the refund application was filed on 30.11.2015, which was within the limitation period when counted from the CESTAT's final order date.Application of Law to Facts: The Tribunal applied the legal principle that the limitation period should start from the date of the final adjudication of the entitlement to the refund, which was the CESTAT's order in this case.Conclusions: The Tribunal concluded that the refund claim was not barred by limitation, as it was filed within the appropriate timeframe from the date of the final judgment.2. Unjust EnrichmentRelevant Legal Framework and Precedents: The doctrine of unjust enrichment is applied to ensure that a refund is not granted if the incidence of duty has been passed on to another party, as per Section 27(2) of the Customs Act.Court's Interpretation and Reasoning: The Tribunal examined the Chartered Accountant's certificate provided by the appellant, which confirmed that the duty incidence had not been passed on to the customers. The Tribunal found that this certificate should not be dismissed without substantial reasons.Key Evidence and Findings: The Tribunal considered the appellant's accounting practices and the Chartered Accountant's certificate, which indicated that the refund amount was shown as receivable and not included in the cost of production.Application of Law to Facts: The Tribunal accepted the appellant's argument that the prices of their products were controlled by the government and not influenced by the duty paid, thus supporting the claim that the duty incidence was not passed on.Conclusions: The Tribunal concluded that the doctrine of unjust enrichment did not apply in this case, as the appellant had not passed on the duty incidence to the customers.SIGNIFICANT HOLDINGSThe Tribunal made several significant holdings in this judgment:Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal stated, 'The period of limitation shall be counted from the date of final order passed by the CESTAT i.e. 13.10.2015 and not from the date of order passed by the Commissioner (Appeals) dated 03.06.2008.'Core Principles Established: The judgment reinforced the principle that the limitation period for a refund claim should be calculated from the date of the final adjudication of entitlement, and not from an earlier provisional or intermediate order.Final Determinations on Each Issue: The Tribunal determined that the refund claim was not barred by limitation and that the doctrine of unjust enrichment did not prevent the refund from being granted. Consequently, the Tribunal set aside the orders of the lower authorities and directed the Assistant Commissioner, Customs Division, Jamnagar, to process the refund claim expeditiously.