2025 (10) TMI 399 - AT - Customs

Appeals dismissed; refund claims for rubber cess on imported natural rubber denied; Section 3(1) CETA equals Section 12 levy

M/s. MRF Limited Versus Commissioner of Customs, Cochin

CESTAT dismissed the appeals and upheld orders rejecting refund claims of rubber cess paid under protest on imported natural rubber, holding that ... Refund of rubber cess paid under protest - rubber cess paid on the imported natural rubber under Section 3(1) of the Customs Tariff Act, 1975 (CVD) during the relevant period - HELD THAT:- The said issue is no more res integra. This Tribunal in the appellant’s own case referring to the earlier judgments and Larger Bench judgment in the case of TTK – LIG Ltd. Vs. Commissioner [2005 (12) TMI 300 - CESTAT, NEW DELHI-LB] on the said issue, held that 'additional duty of customs is very much leviable under Section 3(1) of the CETA in respect of imported rubber equal to the duty of excise levied as cess under Section 12 of the Rubber Act, 1947. The impugned order rejecting the refund claims is sustained.' There are no reason not to follow the said precedent in the appellant’s own case by the Chennai Bench of this Tribunal. Consequently, following the same, the appeals are rejected being devoid of merit. Appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975 (CVD) is leviable on imported natural rubber equal to the duty of excise (rubber cess) under Section 12 of the Rubber Act, 1947. 2. Whether prior Tribunal decisions declining levy of rubber cess on imports (and subsequent Supreme Court orders dismissing Revenue appeals on grounds such as delay or monetary limits) operate to preclude imposition of additional duty under Section 3(1) CETA in later periods. 3. Whether Board instructions/circulars (including earlier clarifications and their subsequent withdrawal) affect the legal liability to levy additional duty on imported rubber. 4. Whether appellants are entitled to refund of rubber cess paid on imported rubber (including consideration of time-bar, unjust enrichment and the need for remand for detailed examination where liability is held not to exist). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Levy under Section 3(1) CETA equal to Section 12 Rubber Act Legal framework: Section 3(1) of the Customs Tariff Act, 1975 permits imposition of additional duty of customs equal to excise duties; Section 12 of the Rubber Act, 1947 imposes a cess on rubber products. Precedent treatment: A Tribunal Larger Bench (referred to and analysed) held that additional duty under Section 3(1) CETA is leviable on imported rubber equal to the cess under Section 12 of the Rubber Act. Coordinate decisions have at times followed this Larger Bench; other benches have departed. Interpretation and reasoning: The Tribunal emphasises legislative competence to levy additional duty via Section 3(1) CETA and observes that the Larger Bench comprehensively considered earlier inconsistent decisions and concluded in favour of levy. The Court finds that legislative scheme permits collection of additional duty on imports equivalent to domestic excise-cess, and that such levy is sustainable as a matter of law. Ratio vs. Obiter: The holding that Section 3(1) CETA authorises levy of additional duty on imported rubber equal to excise cess under Section 12 Rubber Act constitutes the ratio decidendi adopted by the Court. Conclusions: Additional duty of customs under Section 3(1) CETA is leviable on imported natural rubber equal to the duty of excise (rubber cess) under Section 12 Rubber Act; demands based thereon are sustainable. Issue 2 - Effect of prior Tribunal decisions and Supreme Court dismissals Legal framework: Judicial hierarchy and binding effect of precedents; effect of Supreme Court orders dismissing appeals on procedural grounds (delay/monetary limits) on the legal question. Precedent treatment: Some Tribunal benches and earlier decisions (e.g., M.M. Rubber, Vikrant Tyres, London Rubber) had held cess not leviable on imports. Subsequent Larger Bench decision ruled the opposite. Several Supreme Court interventions dismissed Revenue appeals for delay or on monetary-limit grounds without adjudicating merits. Interpretation and reasoning: The Court recognises a history of conflicting Tribunal rulings. It explains that Supreme Court dismissals for delay or monetary limits do not constitute pronouncements on merits that can override the Larger Bench's substantive ruling. Where the Apex Court dismissed appeals without deciding the substantive legal issue, those dismissals do not displace the Larger Bench analysis. The Court further notes that some benches declined to follow the Larger Bench because of perceived approbation by the Apex Court in separate orders; the Court rejects that premise where the Supreme Court did not decide the substantive question. Ratio vs. Obiter: The determination that Supreme Court dismissals on procedural/monetary grounds do not override the Larger Bench ratio is central to the Court's reasoning (ratio) as applied to the appeals before it. Conclusions: The Larger Bench decision upholding levy under Section 3(1) remains binding for the present legal question; Supreme Court dismissals on technical grounds do not annul that precedent for purposes of deciding liability to levy additional duty on imported rubber. Issue 3 - Effect of Board circulars and departmental instructions Legal framework: Administrative instructions and circulars interpret departmental position but cannot override statutory provisions; withdrawal or issuance of circulars may indicate administrative view but does not determine statutory applicability. Precedent treatment: Earlier Board instructions (e.g., dated 22-7-1997 and related clarifications) suggested cess on imports need not be collected as additional duty; these were subsequently withdrawn by Circular No.75/98 dated 8-10-1998, with contemporaneous clarifications indicating additional duty was payable. Interpretation and reasoning: The Court notes that the Board issued clarifications shortly after the initial instruction stating that equivalent cess should be collected as additional duty on imports, and later withdrew the earlier instruction. The Tribunal treats the statutory provision as determinative and recognises the circulars as reflecting evolving administrative positions; the withdrawal confirms that the administration accepts collection of additional duty under Section 3(1). Ratio vs. Obiter: The conclusion that Board circulars do not negate statutory levy and that the withdrawal of earlier instructions supports imposition of additional duty is part of the Court's operative ratio. Conclusions: Board circulars do not alter the statutory power to levy additional duty under Section 3(1); the withdrawal of earlier instructions aligns administrative practice with levy of additional duty on imported rubber. Issue 4 - Entitlement to refund, unjust enrichment and time-bar Legal framework: Principles governing refund claims include establishment of non-liability, time-limits for claims, and the doctrine of unjust enrichment which may bar refunds if the claimant benefited from the relevant services or if the claim is otherwise barred by law. Precedent treatment: Earlier Tribunal orders that found no liability remanded matters for enquiry into time-bar and unjust enrichment; some appellate orders directed original authorities to examine refund claims in detail where liability was held not to exist. Interpretation and reasoning: The Court addressed refund claims only to the extent necessary given its substantive holding upholding levy. It notes prior instances where, when liability was found absent, refund claims required fresh consideration for time-bar and unjust enrichment and were remanded for such determination. In the present appeals the Tribunal sustains the impugned orders rejecting refunds because the underlying levy is held sustainable; accordingly, detailed refund enquiry is not warranted here. Ratio vs. Obiter: The observations about remanding for unjust enrichment/time-bar where liability is negated are explanatory and drawn from prior practice (obiter in this judgment as regards present appeals), whereas the conclusion that refunds are not due because the levy is lawful is operative (ratio). Conclusions: Appellants are not entitled to refund of rubber cess paid on imported natural rubber for the relevant period because the levy under Section 3(1) is lawful; consequently refund claims are rejected. Where liability is otherwise held not to exist in other cases, claims must be examined for time-bar and unjust enrichment, but that remediation is unnecessary here. Overall Disposition The Tribunal affirms that additional duty under Section 3(1) CETA is leviable on imported natural rubber equal to the excise-cess under Section 12 Rubber Act, 1947; prior inconsistent decisions and Supreme Court dismissals on procedural grounds do not displace the Larger Bench ratio; administrative circulars do not negate statutory levy; appeals against rejection of refund claims are dismissed as devoid of merit.