2025 (9) TMI 141 - AT - Customs

Order set aside; matter remanded for reassessment as Notification No.11/2007-Customs applies retrospectively for excess ADD refund

Imperial Waterproofing Industries Limited Versus Commissioner of Customs Nhava Sheva-III Commissionerate.

CESTAT, MUMBAI (AT) set aside the impugned order and partly allowed the appeal, remanding the matter to the original authority for reconsideration. The ... Refund of excess anti-dumping duty (ADD) paid by the importer on specified import entries - import of Acrylonitrile Butadiene Rubber (NBR) falling under Customs Tariff Heading (CTH) 4002 - Section 27 of the Customs Act, 1962 - HELD THAT:- The scope of Section 27 ibid, deals with refund of duty and with reference to the definition of duty as per Section 2(15) ibid, it refers to the customs duty leviable as per the provisions of the Section 12 ibid. Anti-dumping duty is imposed under Section 9A of the Customs Tariff Act, 1975, for the specific purpose of charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the “normal value” or to remove the injury to domestic industry in the importing country caused on account of dumping of that particular product. In terms of Section 9A(8) of the Act of 1975, the provisions relating to inter alia refunds has been made applicable to ADD as they apply to refund of customs duty under the Act of 1962. All the relevant issues relating to grant of refund has been examined by the authorities below, to ascertain the fact whether the ADD paid on imported goods is refundable or otherwise. However, the original authority had not taken into consideration the details of customs duty paid in the various B/Es, which have been recorded manually in the challans duly affixed for its receipt by the Bank. Further, he has also not taken into consideration the fact that the appellants while filing their first refund claim application before the jurisdictional customs authorities (CRC) had submitted the various challans indicating the amount of ADD paid, which have been captured in the order of the original authority dated 24.12.2008. Further, on careful perusal of the records of the case, it is amply clear that in respect of imports vide eight B/Es, applicable customs duty had been paid along with ADD, as the imported goods are allowed for clearance for home consumption by the proper officer of customs under Section 47 of the Act of 1962, only upon satisfaction that the importer-appellants have paid the duty assessed thereon. It also transpires from the records of the case, that the claim for refund has arisen from the Final Order passed by the Tribunal, by issue of Notification Customs dated 31.01.2007. Therefore, the refund application filed by the appellants can be considered on the basis of available records with the Customs Department. Hon’ble Madras High Court in the case of Mehler Engineered Products India Private Limited Vs. Union of India [2018 (7) TMI 39 - MADRAS HIGH COURT] having identical set of facts have examine the issues and delivered their judgement dated 21.06.2018, by holding that Notification issued subsequent to the original notification substituting the chapter heading is retrospective in nature. Further, it is found that the judgement of the Hon’ble Supreme Court delivered in the case of Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika Township Private Limited, [2014 (9) TMI 576 - SUPREME COURT (LB)] relied upon by the learned AR is not relevant to the present case, inasmuch as the facts in the relied upon case are entirely different from the facts of the present case before me. In the referred case, three different types of amendments were introduced in the Income Tax viz., prospective amendment with effect from (w.e.f.) a fixed date, retrospective amendment w.e.f. a fixed anterior date and clarificatory amendments which are retrospective in nature, through issued in the Finance Bill, 2002. In the context of levy of surcharge on block assessment is concerned, it was introduced by insertion of a proviso clause to Section 113 vide Finance Act, 2002 with effect from 01.06.2002. In this case, the facts of the case are that ‘Notes on Clauses’ appended to Finance Bill, 2002 while proposing the insertion of proviso categorically stated that this amendment will take into effect from 01.06.2022. Therefore, it was held in that case that levy of surcharge on block assessment year was having prospective effect. However, in the facts of the case before me, the amount of duty to be imposed as Anti-dumping duty is determined on the basis of ‘margin of dumping’ which was correctly determined as US $ 38.73 per M.T., instead of incorrectly determined amount initially at US $ 138.39 per M.T. and the mistaken was rectified by way of substitution vide issue of Notification No. 11/2007-Customs dated 31.01.2007. Therefore, the facts of the present case is entirely on different footing and the above referred case cited by the learned AR is not applicable here. The impugned order is liable to be set aside, as it had denied refund of an amount of Rs. 5,56,513/- being the excess Anti-Dumping Duty (ADD) in eight B/Es over and above the ADD applicable at US $ 38.73 per M.T. as mentioned in Notification No. 11/2007-Customs dated 31.01.2007, issued by the Ministry of Finance. Further, on the basis of the above discussions in preceding paragraphs, it is opined that N/N. 11/2007-Customs dated 31.01.2007 substituting the amount of ADD as mentioned in Notification No. 78/2005-Customs (ADD) dated 01.09.2005 has retrospective effect, since the same has been issued in acceptance of the order of the Tribunal in the case of Apar Industries [2006 (9) TMI 33 - CESTAT,NEW DELHI] and the Designated Authority in the Ministry of Commerce (i.e., Director General of Trade Remedies, Department of Commerce) had also recommended for consequential change in the Ministry of Finance notification imposing the ADD on the impugned goods. However, as the question of unjust enrichment has not been examined by the authorities below and in order to consider refund of the excess duty paid, this issue is required to be examined by the Original Authority. The impugned order dated 24.05.2022 is set aside and the appeal filed by the appellants is partly allowed in favour of the appellants by way of remand to the original authority. ISSUES PRESENTED AND CONSIDERED 1. Whether excess anti-dumping duty (ADD) paid by the importer on specified import entries is refundable under Section 27 of the Customs Act where a subsequent substitutive notification reduced the ADD amount. 2. Whether a substitutive notification issued by the Central Government in modification of an earlier ADD notification has retrospective effect so as to make reduced ADD applicable to earlier imports. 3. Whether refund claimants must produce original challans, importer copies of Bills of Entry, CA certificates, balance-sheets and remittance proofs to establish entitlement and quantify refund under Section 27(1A), and whether absence of such documents disentitles them where department records already contain payment evidence. 4. Whether the doctrine of unjust enrichment precludes refund (or requires refund to be credited to the Consumer Welfare Fund) and what proof is required to show that the incidence of duty was not passed on to any other person. 5. Whether limitation and other procedural bars apply to a refund claim made after a Tribunal/authority decision in another case that resulted in substitution of ADD rates. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Refundability of excess ADD under Section 27 Legal framework: Section 27 of the Customs Act provides a statutory remedy for refund of duty paid; sub-sections require claim within prescribed limitation and require documentary evidence to show payment and non-passing of incidence (Section 27(1A)). Section 9A/9AA of the Customs Tariff Act and allied rules govern levy and refund of ADD and make refund provisions applicable to ADD. Precedent treatment: The Tribunal's earlier final order altering ADD rates and subsequent government substitution of rates were treated as operative for refund purposes; apex Court jurisprudence on refund and statutory forum (i.e., refund claims to be adjudicated under the statutory provisions and unjust enrichment doctrine) was applied. Interpretation and reasoning: ADD can be levied only up to the margin of dumping; levy above that lacks statutory sanction. Where government notification substituted the higher ADD with a lower rate pursuant to acceptance of a Tribunal finding, the excess collected is not authorised by Section 9A and thus falls within the refund scope of Section 27. The Tribunal found no dispute as to the quantum of excess ADD claimed and held that refund is admissible in principle. Ratio vs. Obiter: Ratio - excess ADD paid in contravention of the permissible margin under Section 9A is refundable under Section 27. Obiter - observations on related subsequent review recommendations not necessary for the principal holding. Conclusion: Refund of the excess ADD (quantified in the record) is prima facie payable under Section 27 subject to satisfaction of documentary and unjust enrichment requirements. Issue 2 - Retrospective effect of substitutive notification Legal framework: The Customs Tariff Act empowers imposition and alteration of ADD by notification. Principles of statutory construction (including treatment of substitution/amendment) determine retrospective effect. Precedent treatment: Authority was guided by prior judicial reasoning that a substituted provision, when incorporated into an earlier provision, is to be read into the earlier enactment and that substitution may be retrospective where it merely rectifies an obvious mistake or implements a judicial/administrative finding. Decisions referenced establish factors to assess retrospectivity: scope of statute, remedy, former state of law, and legislative/comparative intent. Interpretation and reasoning: The substituted notification reduced ADD for a specified exporter following acceptance of a Tribunal order and a designated authority recommendation. The substitution corrected the duty amount to the margin properly determined; such substitution was held to have retrospective effect because it implemented the Tribunal's determination and the designated authority's consequential recommendation, and because substitution was not imposing a new penalty or withdrawing benefit but rectifying an error in levy. Ratio vs. Obiter: Ratio - a substitutive notification issued to give effect to a Tribunal/authority finding substituting an incorrect ADD amount operates retrospectively for the period covered by the original notification as it corrects the chargeable amount. Obiter - broader comments on retrospective operation in unrelated contexts. Conclusion: The substitutive notification reducing the ADD is retrospective and the lower ADD applies to the imports in question, making excess payment refundable. Issue 3 - Evidentiary requirements under Section 27(1A) and departmental record sufficiency Legal framework: Section 27(1A) requires documentary or other evidence establishing payment and non-passing of incidence; statutory scheme contemplates furnishing of original documents but also recognizes that refund claims can be examined on available records. Precedent treatment: Authorities below rejected claims for non-production of original challans and certificates. The Tribunal considered earlier departmental file history and prior submissions in earlier rounds, noting that initial refund filings had included challans and that departmental records already contained relevant documents. Interpretation and reasoning: The Tribunal found the original adjudicating authority erred in treating the claim as incomplete by ignoring earlier-submitted challans and assembled departmental records across multiple adjudication rounds. Since clearance for home consumption requires duty payment and the customs records reflect payment, the Tribunal concluded that the refund claim can be considered on the basis of available records and earlier submissions; however, quantification and non-passing of burden still require examination based on balance-sheets/CA certificates and other evidence. Ratio vs. Obiter: Ratio - where departmental files and earlier submissions contain payment evidence, a refund claim cannot be rejected solely for lack of re-production of originals; factual sufficiency may be assessed from available records. Obiter - remarks on desirability of originals for expedition. Conclusion: Rejection on grounds of non-production of documents was factually incorrect where records and earlier submissions established payment; the claim merits adjudication on the merits using available records and any further evidence to address unjust enrichment. Issue 4 - Unjust enrichment and allocation of refund (claimant vs Consumer Welfare Fund) Legal framework: Established doctrine requires claimant to show that the burden of the tax/duty was not passed on; refund may be denied or redirected (e.g., to public fund) where incidence has been passed on or cannot be traced to a person entitled to refund. Section 27(1A) mandates evidence on non-passing of incidence. Precedent treatment: Apex Court principles on unjust enrichment were applied: refund is not automatic; claimant must prove non-passing; if burden was passed on, refund should be denied or, if the ultimate payer cannot be identified, funds may be retained by the State/credited to public fund. Interpretation and reasoning: The Tribunal held that unjust enrichment was not examined by authorities below and that the original authority must evaluate balance-sheets, CA certificate and other records to determine whether the claimant passed on the burden. The Tribunal remanded the matter for limited adjudication on this point, directing opportunity to produce evidence and to decide whether refund should be paid to the claimant or credited to the Consumer Welfare Fund. Ratio vs. Obiter: Ratio - refund can be granted only after determination that the claimant did not pass on the duty; remand for such determination is necessary. Obiter - ancillary comments on financial chaos risk if unjust enrichment ignored. Conclusion: The question of unjust enrichment remains open and requires remand to the original authority for fact-based determination with opportunity to produce required documents; refund admissibility is subject to that determination and the authority must decide remedy (claimant or Consumer Welfare Fund). Issue 5 - Limitation and reliance on another order for claiming refund Legal framework: Section 27 prescribes time limit computation, including where duty becomes refundable as consequence of a judgment or order of appellate bodies; statutory scheme requires claim within prescribed period except where expressly provided. Precedent treatment: Principles require claimants to pursue their own remedy and limits the effect of another person's decision except where the statute contemplates computation from the date of the judgment/order; however where the substitution/notification flows from a Tribunal order affecting rate, limitation may be computed from that order/notification. Interpretation and reasoning: The Tribunal accepted that the refund claim in latest round was within statutory time as computed from the relevant notification/decision; it rejected departmental contention that limitation or time-bar prevented consideration. The Tribunal held that Section 27's limitation provisions and the facts (notification substituting rate following Tribunal order) permitted the claim to be entertained. Ratio vs. Obiter: Ratio - where a substitutive notification reducing duty follows a Tribunal/order acceptance, refund claims arising therefrom fall within the statutory limitation rules and are not barred if presented within the prescribed period; prior filings and departmental records factor into timeliness. Obiter - discussion of cases with different factual matrices not determinative here. Conclusion: Limitation does not preclude the present refund adjudication in view of the notification issued in implementation of the Tribunal/authority determination and the timing of the claimant's submissions. Final Disposition (Court's Conclusion) The impugned appellate order denying refund was set aside to the extent that it refused refund of excess ADD; the substituted notification was held retrospective and the excess ADD payable is refundable in principle. The matter is remanded to the original authority for limited adjudication solely on unjust enrichment and quantification/appropriation (claimant vs Consumer Welfare Fund), with directions to give reasonable opportunity to the claimant to produce balance-sheets, CA certificate and other supporting records; otherwise refund to be determined and disposed of in accordance with statutory provisions.