2025 (11) TMI 134 - AT - Customs

Refund of CVD granted where claim timely per controlling decision, payments made under protest; TR-6 not required; no unjust enrichment

CESTAT KOLKATA (AT) allowed the appeal and set aside the impugned order, directing refund of CVD. The tribunal held the refund claim was not ... Rejection of refund claim of additional customs duty (CVD) paid - rejection on the ground that condition stipulated in the proviso contained in the N/N. 30/2004-C.E. dated 09.07.2004 have not been fulfilled - availment of credit on inputs when goods imported by it were manufactured outside India - Original copies of some of the TR-6 challans were not presented and refund cannot be sanctioned on the basis of photocopies of the same - rejection on the ground of time limitation - rejection also on the ground of unjust enrichment. Time Limitation - HELD THAT:- It is observed that the appellant has filed the refund application on 11.03.2016, which is within the period of one year from the order passed by the Hon’ble Supreme Court on 26.03.2015 in the case of M/S SRF LTD., M/S ITC LTD [2015 (4) TMI 561 - SUPREME COURT] - It is observed that the Ld. Commissioner (Appeals) has rightly recognised the applicability and binding nature of the judgment [supra] and the maintainability of the refund application in respect of CVD paid at LCS, Jogbani within one year of the said judgment. Thus, it is observed that the refund application filed by the appellant within one year from the date of date of the Supreme Court ruling on 26.03.2015, cannot rejected as time barred. The duty payments were made “under protest” and hence, the question of time bar does not arise. The dispute with regard to leviability of CVD arose for the first time in September 2004 in respect of an import consignment dealt with by the New Delhi Customs authorities. As the customs authorities have not extended the benefit of exemption from the payment of CVD under the Customs Tariff Act, 1975 read with Notification No. 30/2004-C.E. dated 09.07.2004, the appellant paid the duty under protest by submitting letter dated September 4, 2004. By the said letter, the appellant made their intention clear to pursue the matter in appellate proceedings in the event of an adverse adjudication - the appellant also made their protest known at other ports, inter alia, by making appropriate endorsements on bills of entry/TR-6 challans. It is observed that when duty payments were made “under protest” the question of time bar does not arise. In such circumstances, the Deputy Commissioner was not justified in holding that there was no protest before submission of the letter dated March 4, 2009. Thus, the rejection of the refund claim by the lower authorities on the ground of ‘time barred’, is not sustainable. Rejection on the ground that Original copies of some of the TR-6 challans were not presented and refund cannot be sanctioned on the basis of photocopies of the same - HELD THAT:- It is observed that one of the ground on which the refund claim filed by the appellant was rejected is that Original copies of some of the TR-6 challans were not presented and refund cannot be sanctioned on the basis of photocopies of the same. In this regard, the non-availability of original copies of TR-6 Challans is a hyper technical objection and refund cannot be denied on such ground. It is a settled principle that even if original TR-6 challans are not available, the assessee cannot be denied refund when payment of duty can be verified from the Department’s records. Rejection of the refund claim on the ground of ‘unjust enrichment’ - HELD THAT:- When the appellant decided to pay the duty ‘under protest’, they submitted a letter of protest dated September 4, 2004 to the Deputy Commissioner of Customs, New Custom House, IGI Airport, New Delhi, where the dispute first arose. In the said letter, the appellant categorically indicated that they would not pass on the burden of CVD to the consumers and it would be entirely borne by them. The appellant further stated that they would claim refund as and when they succeed in the appellate proceedings - It is observed that the authorities below have wrongly ignored the certificate and arbitrarily assumed that the appellant had passed on the incidence of CVD merely by comparing the appellant’s sale price with the FOB value of a few items. In this regard, the lower authorities failed to consider that several charges were incurred by the appellant before selling the goods to the consumers like, freight, distribution charges, packaging and labelling charges, administrative charges etc. Thus, the reasons given by the lower authorities to substantiate the allegation that the appellant has not passed the test of unjust enrichment, is legally not sustainable. The Chartered Accountants is a professional who after verifying all the records of the appellant has certified that the appellant has not passed on the duty incidence to the customers. Such Certificate issued by a qualified professional cannot be ignored arbitrarily. Thus, on the basis of the Certificate, issued by the Chartered Accountant, the appellant has not passed on the burden of CVD to the consumers - the issue of ‘unjust enrichment is not applicable in this case. The impugned order is set aside - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether refund claims of additional customs duty (CVD) paid can be rejected as time-barred when filed within one year of a binding Supreme Court decision overturning departmental view, where payments were made 'under protest'. 2. Whether payments of duty marked or otherwise shown to be made 'under protest' amount to provisional assessment so as to render separate challenge/reassessment of Bills of Entry unnecessary for claiming refund. 3. Whether the introduction of self-assessment (post-2011) and finality of Bills of Entry filed prior to 08.04.2011 precludes refund of duties paid under protest for the pre-2011 period. 4. Whether non-production of original TR-6 challans (payment receipts) can be a ground to deny refund when payments can be verified from departmental records. 5. Whether refund can be denied on the ground of unjust enrichment where the claimant produces contemporaneous evidence (including a Chartered Accountant's certificate) showing the duty burden was not passed on to buyers. ISSUE-WISE DETAILED ANALYSIS Issue 1: Timeliness of refund claims filed within one year of a binding Supreme Court decision where payments were made under protest. Legal framework: Section providing one-year limitation for refund claims under the Customs/Central Excise regime (analogous provisions and provisos barring limitation where duty was paid under protest) and the principle that a binding judgment of the Supreme Court giving relief opens a one-year window for refund. Precedent treatment: The Tribunal accepted binding effect of the Supreme Court ruling and applied decisions holding that where duty is paid under protest the limitation provision does not apply (citing relevant tribunal/High Court decisions endorsing the second proviso exception to limitation when payments were under protest). Interpretation and reasoning: The Court examined the chronology and found the refund application was filed within one year of the Supreme Court decision. It further held that payments made under protest from the inception triggered the proviso exempting the one-year limitation. Conduct and contemporaneous protest letters endorsed in records sufficed to establish protest even if some entries were later formally recorded at particular ports. Ratio vs. Obiter: Ratio - where duty was paid under protest and a binding Supreme Court decision in appellant's favour followed, a refund application filed within one year of that decision cannot be rejected as time-barred. (This is applied as the operative rule.) Conclusion: The refund application was timely and rejection on limitation grounds was unsustainable. Issue 2: Effect of payment 'under protest' - provisional assessment and need for separate challenge of Bills of Entry. Legal framework: Principles governing assessment finality, provisional assessment when payment is made under protest, and statutory/regulatory mechanisms for reassessment or amendment of Bills of Entry (including Section 149 references and analogous central excise jurisprudence). Precedent treatment: The Court relied on a line of tribunal and High Court decisions holding that payment under protest amounts to a challenge to assessment and renders the assessment provisional until a speaking order vacating the protest is passed. It distinguished later Supreme Court decisions which require challenge of assessment orders in cases where no protest was recorded, noting those decisions are inapplicable where protest exists. Interpretation and reasoning: The Tribunal observed that the department had not passed any speaking order vacating the protests. Consequently, assessments remained provisional and did not attain finality simply by the passage of time or by self-assessment rules. The protest sufficed to inform the department of the need to reassess; failure by authorities to act cannot be used to prejudice the claimant's refund rights. The Court also accepted that a refund application can operate as a request for amendment/reassessment under statutory provisions permitting amendment of Bill of Entry, without a separate appeal, particularly where duty was paid under protest. Ratio vs. Obiter: Ratio - payment under protest converts assessment into provisional assessment and obviates the necessity of separately challenging the Bill of Entry for purposes of refund; assessment finality principles requiring challenge do not apply where protest was lodged and not vacated by a speaking order. Conclusion: The requirement to challenge the Bills of Entry did not apply; refund could not be denied on the ground that assessment was not contested by a separate appeal. Issue 3: Effect of self-assessment regime and finality of pre-2011 Bills of Entry on refund claims arising from duties paid under protest. Legal framework: Self-assessment introduction and its effect on finality of past assessments; interaction with protest doctrine and statutory limitation provisions. Precedent treatment: Tribunal decisions held that self-assessment does not oust the protection afforded by a prior protest; decisions cited by the appellant and relied upon by the Court support that protest maintains provisional character despite self-assessment regimes. Interpretation and reasoning: The Tribunal rejected the Revenue's contention that pre-2011 Bills attained finality merely because of self-assessment, since the payments were shown to be under protest and no speaking order vacating the protest had been issued. The Court emphasized the department's duty to pass a speaking order if it disputes the protest; in absence thereof, the assessments cannot be treated as final for the purpose of denying refunds. Ratio vs. Obiter: Ratio - self-assessment does not nullify the effect of a contemporaneous protest; refund remains maintainable where duty was paid under protest even for pre-self-assessment periods. Conclusion: Self-assessment introduction did not bar refund claims for duties paid under protest prior to 08.04.2011. Issue 4: Non-production of original TR-6 challans and reliance on departmental records/photocopies. Legal framework: Evidentiary requirements for refund of duties and administrative practices (including acceptance of alternative proof such as departmental records, copies, and provision of indemnity bonds where original documents are missing). Precedent treatment: High Court and Tribunal authorities were followed which hold that non-production of original payment receipts is a hyper-technical objection and cannot defeat a bona fide refund claim where payment can be verified from departmental files; indemnity mechanism may be used to safeguard revenue. Interpretation and reasoning: The Court found that departmental records could verify payment; insisting on originals as a precondition to refund would be unreasonable and contrary to established practice. The Tribunal relied on authorities permitting refunds on the basis of available records and professional certificates, and permitting safeguards such as indemnity bonds. Ratio vs. Obiter: Ratio - refund cannot be denied solely for non-production of original TR-6 challans where payment can be verified from departmental records or other reliable evidence. Conclusion: Failure to produce some original TR-6 challans did not justify rejection of the refund claim. Issue 5: Unjust enrichment - whether claimant passed on duty burden and sufficiency of a Chartered Accountant certificate. Legal framework: Principle of unjust enrichment presuming that an importer who paid duty may have passed the burden to buyers; burden on claimant to rebut presumption using contemporaneous records and credible evidence. Precedent treatment: The Tribunal relied on established practice that a qualified professional's certificate and detailed records can rebut the presumption of pass-on, and that a mere comparison of sale price with FOB values without accounting for intervening costs is inadequate. Interpretation and reasoning: The Tribunal accepted the Chartered Accountant's certificate (stating duty amounts were shown as loans/advances and not embedded in sale price) and the explanation of various cost components (freight, distribution, packaging, administrative costs) which the lower authorities had not considered. The Court concluded that the lower authorities' cursory comparison of limited pricing data did not meet the standard required to establish pass-on and unjust enrichment. Ratio vs. Obiter: Ratio - where credible contemporaneous professional certification and supporting records establish that duty burden was not passed to buyers, the presumption of unjust enrichment is rebutted and refund should not be denied on that ground. Conclusion: The claim of unjust enrichment failed; the appellant had not passed the duty burden to consumers. Final Disposition The Tribunal set aside the impugned order, allowed the appeal and directed consequential relief consistent with the findings above: refund claims were not time-barred, assessments remained provisional due to protest, non-production of some original challans was not a valid ground for denial, and unjust enrichment was not established.