2025 (8) TMI 817 - AT - Customs

Refund Claims Need Assessment Order Modification Under Customs Act Section 128, Not Just Section 27

Siemens Ltd. Versus Commissioner of Customs (Import), Mumbai (Air Cargo Import)

Siemens Ltd. Versus Commissioner of Customs (Import), Mumbai (Air Cargo Import) - TMI 1. ISSUES PRESENTED and CONSIDERED Whether self-assessment under the Customs Act, 1962 can be modified only under Section 128 or also under other provisions such as Section 149 and Section 154. Whether the reassessment of Bills of Entry under Section 149 after initial self-assessment and payment of duty is valid and lawful. Whether an application for refund of customs duty paid initially can be entertained when reassessment has been done and duty discharged through Advance Authorisation. The scope and interpretation of the Supreme Court ruling in ITC Ltd. regarding modification of self-assessment orders and entitlement to refund. The applicability and interpretation of the Bombay High Court ruling in Dimension Data India Pvt. Ltd. clarifying the scope of modification of self-assessment and refund claims. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Scope of Modification of Self-Assessment under Customs Act Relevant Legal Framework and Precedents: The Customs Act, 1962 provides mechanisms for assessment and reassessment of customs duty. Section 128 allows modification of assessment orders including self-assessment orders. Section 149 permits reassessment of duty in certain circumstances. Section 154 allows correction of clerical or arithmetical errors in orders. The Supreme Court in ITC Ltd. held that refund claims cannot be entertained unless the assessment or self-assessment order is modified in accordance with law through appropriate proceedings, which include Section 128 or other relevant provisions. Court's Interpretation and Reasoning: The Tribunal examined the Supreme Court's para 47 in ITC Ltd., which clarified that modification of self-assessment orders is essential before entertaining refund claims. The Court emphasized that the Supreme Court did not restrict modification solely to Section 128 but included 'other relevant provisions' of the Customs Act. The Tribunal also considered the Bombay High Court's ruling in Dimension Data India Pvt. Ltd. which elaborated that modification of self-assessment can be effected under Sections 149 and 154 as well. Key Evidence and Findings: The reassessment in the present case was conducted under Section 149, and the duty was discharged through Advance Authorisation. The appellant sought refund of the initially paid duty after reassessment. The original authority rejected the refund application relying on the interpretation that only Section 128 permits modification of self-assessment. Application of Law to Facts: The Tribunal found that restricting modification to Section 128 alone is inconsistent with the Supreme Court's broader interpretation. Since reassessment under Section 149 is a recognized mode of modifying the original self-assessment, the reassessment in this case was valid. Therefore, the appellant's claim for refund following reassessment was legally maintainable. Treatment of Competing Arguments: The original authority and learned Commissioner (Appeals) relied on a narrow interpretation of ITC Ltd. to deny refund. The appellant contended that the Supreme Court's ruling and the Bombay High Court's clarification support modification under Section 149 and 154. The Tribunal accepted the appellant's argument, finding the broader interpretation consistent with the statutory scheme and judicial precedents. Conclusions: Self-assessment orders can be modified not only under Section 128 but also under other relevant provisions such as Section 149 and Section 154. The reassessment under Section 149 is a valid mode of modification, enabling refund claims post reassessment. Issue 2: Validity of Reassessment under Section 149 and Entitlement to Refund Relevant Legal Framework and Precedents: Section 149 of the Customs Act empowers the proper officer to reassess duty if the original assessment is found to be erroneous or incomplete. The Supreme Court ruling in ITC Ltd. and the Bombay High Court ruling in Dimension Data India Pvt. Ltd. clarify that reassessment under Section 149 is a legitimate mode of modifying self-assessment. Court's Interpretation and Reasoning: The Tribunal noted that the reassessment dated 28.11.2019 was carried out by the competent authority under Section 149 and the duty was discharged through debit to Advance Authorisation. The reassessment was not invalid or void ab initio as held by the Commissioner (Appeals). The Tribunal held that reassessment under Section 149 is a recognized legal procedure for modification of self-assessment. Key Evidence and Findings: The appellant initially paid duty based on self-assessment. Upon reassessment, the duty liability was discharged through Advance Authorisation. The appellant applied for refund of the initially paid duty. The original authority rejected the refund application, holding reassessment invalid. Application of Law to Facts: The Tribunal applied the legal principle that reassessment under Section 149 is permissible and valid. Since the reassessment modified the original self-assessment, the appellant was entitled to refund of the duty initially paid. The rejection of refund on the ground that reassessment was invalid was incorrect. Treatment of Competing Arguments: The revenue's argument that reassessment was invalid and refund claim was not maintainable was rejected. The Tribunal relied on the Supreme Court and High Court rulings to uphold the validity of reassessment and consequent refund entitlement. Conclusions: The reassessment under Section 149 was valid and lawful, and the appellant was entitled to refund of the customs duty initially paid. Issue 3: Interpretation of Supreme Court and High Court Rulings on Refund Claims Post Self-Assessment Relevant Legal Framework and Precedents: The Supreme Court in ITC Ltd. (para 47) held that refund claims cannot be entertained unless the assessment or self-assessment order is modified through appropriate proceedings. The Bombay High Court in Dimension Data India Pvt. Ltd. (paras 22.1 and 22.2) clarified that modification can be under Section 128 or other provisions including Section 149 and 154. Court's Interpretation and Reasoning: The Tribunal analyzed the Supreme Court's ruling and noted that it requires modification of the assessment order before refund claims are entertained but does not confine such modification exclusively to Section 128. The High Court ruling further elucidates that reassessment under Section 149 and correction under Section 154 are also valid modes of modification. Key Evidence and Findings: The Tribunal extracted and reproduced the relevant paragraphs from both rulings to demonstrate the legal position. It found that the original authority's narrow interpretation was inconsistent with these rulings. Application of Law to Facts: Applying these rulings, the Tribunal concluded that the reassessment under Section 149 constituted proper modification of the self-assessment order, thereby permitting refund claims. Treatment of Competing Arguments: The revenue's reliance on a restrictive reading of ITC Ltd. was countered by the appellant's submissions supported by the Bombay High Court's clarifications. The Tribunal preferred the latter interpretation. Conclusions: The Supreme Court and High Court rulings collectively support that refund claims post self-assessment are maintainable once the order is modified under Section 128 or other relevant provisions such as Sections 149 and 154. Issue 4: Jurisdiction of Assessing Authority to Reopen and Reassess Self-Assessment Relevant Legal Framework and Precedents: Section 17(4) of the Customs Act permits the proper officer to reassess the duty if not satisfied with the self-assessment. The Supreme Court in ITC Ltd. recognized that any person aggrieved by an order including self-assessment can seek modification under Section 128 or other provisions. Court's Interpretation and Reasoning: The Tribunal observed that the assessing group had jurisdiction under Section 17(4) and Section 149 to reassess the Bills of Entry. The reassessment was not ultra vires or without jurisdiction. The Commissioner (Appeals) had erred in holding the reassessment as ab initio void. Key Evidence and Findings: The reassessment was conducted by the competent authority within the statutory framework. The reassessment led to discharge of duty through Advance Authorisation, reflecting lawful exercise of power. Application of Law to Facts: The Tribunal applied the statutory provisions and judicial pronouncements to uphold the jurisdiction of the assessing authority to modify self-assessment through reassessment. Treatment of Competing Arguments: The revenue argued that the assessing group lacked jurisdiction to reopen self-assessment except under Section 128. The Tribunal rejected this restrictive view. Conclusions: The assessing authority has jurisdiction to reassess self-assessment under Section 17(4) and Section 149, and such reassessment is valid for modification of the original order.