TaxTMI 
TaxTMI 
2012 (11) TMI 919
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....lants are in the business of selling and exporting agricultural produce. As per Section 3 of the Agricultural and Processed Food Products (Export Cess) Act, 1985 (the Cess Act), there shall be levy and collection of cess and duty of customs not exceeding 3% ad valorem value of exported scheduled products. The appellants entered into export sale FOB contracts with buyers in Austria, Geneva and Switzerland. After obtaining necessary export documents/licences/permits and paying all export duties and levies, they paid cess under the Cess Act at 0.5% ad valorem. In the invoices relevant to all the shipping bills the value of the export at one composite figure was indicated. These exports were effected in June and July, 2006. The Cess Act was repealed with effect from 1-6-2006 vide the Cess Loss (Repealing & Amendment) Act, 2006. Despite this, the Customs Officials from Kakinada Port insisted for payment of cess and all the appellants paid the cess against the shipping bills after the repeal of the Cess Act. The levy and collection, indisputably was not authorized by law. The appellants filed claims under Section 27 of the Act for refund of cess of export of rice consequent on its abolit....
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....find that from the above definition it is not possible to arrive at a definite conclusion that the FOB value includes the cess paid on export of rice especially in cases where the contract with the foreign buyer specifically provided that the export duty/taxes etc., were to the account of the seller. In all the cases except in the case of M/s. Al Gyas Exports Pvt. Ltd., the appellants have furnished copies of the relevant contracts containing the above clause. Unless the Department is satisfied on examination of the documents showing remittance received by the appellants, the finding in the impugned order that the FOB value recovered included the impugned cess cannot be sustained. As it is, there is no reliable finding in the impugned order to conclude that the disputed cess amounts had been recovered as part of the FOB value." (emphasis supplied) 6. It appears that in their written arguments departmental representative raised a plea that when the assessee has not challenged the assessment order, claim for refund would not lie. Countenancing this plea the CESTAT rejected the appeals observing as under : "As regards the claim that a refund claim for excess duty paid can b....
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....t enrichment and not on any other ground. Even before the CCE (A) the plea which was raised before the CCE (A) was not authorized and the appellate authority decided the matter only with reference to the question whether the appellants are disentitled for refund under Section 27 of the Act on the ground that FOB value is inclusive of the cess. The Counsel would further rely on Section 129B(1) of the Act and Rule 10 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 and would submit that having regard to these provisions the CESTAT could not have decided the question whether appellants were disentitled to claim refund without filing appeals against the assessment order as the same is not a question which was set out in the memorandum of grounds of appeals of the department. Relying on the decision of the Full Bench of this Court in CIT v. Late Begum Noor Bano Alladin - 1993 (204) ITR 166 (A.P.) they would contend that unless the subject matter is one which necessarily arises out of determination made by the first appellate authority, the CESTAT could not have gone into such questions. In support of their submissions, the Counsel also relied on CIT v. S....
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....t enrichment can be challenged by the respondent as per Order XLI Rule 22 of CPC. It is nextly contended that refund claims are not maintainable when no appeal is filed against the speaking/assessment order of the adjudicating authority. The attention of this Court is invited to C.C.E. v. Flock (India) (P) Ltd. - 2000 (120) E.L.T. 285 (S.C.) = 2000 (6) SCC 650, CIT v. Karnataka Power Corporation Limited. - 2002 (143) E.L.T. 482 (S.C.) = (2002) 9 SCC 571 and Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) - 2004 (172) E.L.T. 145 (S.C.) = (2005) 10 SCC 433. Placing reliance on NTPC v. CIT - 1998 (99) E.L.T. 200 (S.C.) = 1997 (7) SCC 489 and Davangere Cotton Mills Ltd. v. C.C.E. - 2006 (198) E.L.T. 482 (S.C.) = 2006 (9) SCC 443 the Senior Standing Counsel would submit that under Section 129B(1) read with Rule 10 of the CESTAT Rules, the Tribunal has all powers of the original authority and when the ground was specifically taken by the Revenue in the written arguments that the FOB value includes cess, the Tribunal cannot be said to be in error in deciding the issue of bar of refund claim for not availing appellate remedy. Lastly he would submit that an appeal to High....
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.... petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety inv....
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....allenged by the department. 14. Order XLI Rule 22 of CPC as it stands after 1976 CPC Amendment enables the respondent to challenge any adverse finding even if the decree is in his favour, with or without filing cross-objections to the judgment in appeal. In Banarsi v. Ram Phal - (2003) 9 SCC 606 the Supreme Court considered the scope of Order XLI Rule 22 of CPC as it existed before and after CPC Amendment, 1976 and held that, "to the extent to which the decree is against the respondent and he wishes to get rid of it he should have either filed an appeal on his own or taken cross-objection failing which the decree to that extent cannot be insisted on by the respondent for being interfered, set aside or modified to his advantage". Excerpting the relevant placetum from Banarsi may be beneficial. "The CPC amendment of 1976 has not materially or substantially altered the law except for a marginal difference. Even under the amended Order 41 Rule 22 sub-rule (1) a party in whose favour the decree stands in its entirety is neither entitled nor obliged to prefer any cross-objection. However, the insertion made in the text of sub-rule (1) makes it permissible to file a cross-objec....
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....uestion of interpreting the sale contract between the appellant and the foreign buyer. 16. The appellants exported long grain rice under various shipping bills. The cess paid for each consignment is not separately shown though it is prominently mentioned in each of the shipping bills for export with cess. A perusal of these would show that the invoice value and FOB value are the same. The Revenue would rely on Section 28C of the Act which mandates that every person liable to pay the duty on any goods shall prominently indicate in all the documents the amount of duty which will form part of the price at which the goods are sold. The cess paid is not separately mentioned. In such an event Section 28D of the Act comes into operation and it shall be deemed that the incidence of duty is passed on to the buyer. The non-mention of the cess in the shipping bills for each consignment and the invoice value and FOB value are the two factors which are strongly relied on by the appellants to support their plea that the cess was borne by them and that it was not passed on to the foreign buyer. They also place reliance on the sale contract and Incoterms. There is no dispute that they are ....
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....r is under the contract of carriage or of insurance liable to pay these sums to the carrier or to the underwriter or to both. As between the parties to the contract of sale the buyer bears the ultimate responsibility for these payments, and he takes the risk of any variation in, for example, freight rates which may occur between the time of sale and the making of the contract of affreightment. (Internal quotations omitted) 18. International Chamber of Commerce created Incoterms in 1936. The purpose of these official ICC Rules for interpretation of trade terms to facilitate conduct of International trade and to provide a set of rules for the interpretation of the most commonly used trade terms for foreign trade and minimize inconsistent interpretation in different countries (see Foreword and Introduction to Incoterms, 2000). Para 14 of the Introductory chapter is relevant and reads as under. "14. Customs clearance The term "customs clearance" has given rise to misunderstandings. Thus, whenever reference is made to an obligation of the seller or the buyer to undertake obligations in connection with passing the goods through customs of the country of export or import it ....
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....r must, subject to the provisions of B6, pay All costs relating to the goods until such time as they have passed the ship's rail at the named port of shipment; and Where applicable, the costs of customs formalities necessary for export as well as all duties, taxes and other charges payable upon export. (emphasis supplied) (A7 to A9 are omitted here as not necessary) 19. Thus it shall be the duty of seller to place the goods for transmission by bearing all the expenses of shipment including customs duties before the goods are put on board and if any transit duties are levied by the Customs authorities they shall be for the seller's account only. 20. Like in other contracts, clause 15 of the sale contract dated 27-4-2006 between the appellant (in CEA No. 158 of 2011) and the buyer reads as under. "15. Taxes/Duties : All export duties, taxes, levies are on cargo present or future, in country of origin, shall be for seller's account. All import duties, taxes, levies etc present or future in country of destination, shall be for buyer's account. All taxes/duties on freight and vessel is to buyer's vessel owner's account." 21. As per the above clau....
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....sisting of as many judicial and technical members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act. Rule 10. Grounds which may be taken in appeal. - The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any grounds not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or those taken by leave of the Tribunal under these rules. 25. A plain reading of the above two provisions would show that the CESTAT may pass such orders thereon as it thinks fit confining, modifying, annulling the decision or order appealed against or may refer the case back to the lower authority. Rule 10 clarifies that ordinarily CESTAT shall not allow new grounds which are not taken in the memorandum of appeal unless specifically permitted to do so. Section 254(1) of the Income Tax Act, 1961 read with Rule 11 of the Income Tax Appellate Tribunal Rules, 1963, is in similar language. These provisions are similar provisions in the repealed enactment that have come up for consideration before the Court....
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....We may briefly advert to these two decisions. In NTPC a three Judge Bench of the Supreme Court considered the scope of Section 254 of the Income-tax Act. The Income-tax Appellate Tribunal referred the question to the Supreme Court as to whether the Tribunal has jurisdiction to examine additional ground which has a bearing on the tax liability of the assessee. Observing that there is no reason to restrict the power of the Tribunal under Section 254 of the Income-tax Act only to decide the grounds which arise from the order of the CIT, the Supreme Court held that the Tribunal should not be prevented from considering the question of law arising out of the appeal although not raised earlier and that the Tribunal will have the discretion to allow or not to allow a new ground when it is necessary to consider the question in order to correctly assess the tax liability of an assessee. 28. In Davangere Cotton Mills, the question arose whether the third member of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT, for brevity) to whom the case was referred on difference of opinion between the Bench of two members could permit an additional ground to be raised under Rule....
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.... the rates specified in the Customs Tariff Act, 1975 on goods imported into, or exported from India. "Exporter" as defined in Section 2(20) of the Act, "importer" as defined in Section 2(26) of the Act, and export/import agent as regulated by the Customs House Agents Licensing Regulations, 2004 are liable to pay the customs duties or tariffs as charged under Section 12 of the Act. Any such person has right to claim refund if such amount is (i) paid by such person in pursuance of an order of assessment; or (ii) borne by him which means the amount might have been paid by the customs agent or a consultant or a banker but the actual amount gets debited to the importer/exporter as the case may be. An application has to be made to jurisdictional Assistant/Deputy Commissioner of Customs before expiry of one year in the case of import by an individual for his personal use or by Government or by educational/research/charitable institution/hospital and in other cases before expiry of six months from the date of payment of duty and interest. further, every such application shall have to be accompanied by documentary proof or other evidence including documents under Section 28C of the Act, to ....
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.... the manufacturer filed an application under Rules 11 and 173B of the Central Excise Rules, 1944 for refund of duty pleading wrong classification under tariff item 22B. The refund claim was rejected by the Assistant Collector. On appeal, the Collector allowed and remanded the matter to the original authority directing to reconsider classification aspect. This order was unsuccessfully assailed by the Revenue before the CEGAT. Before the Supreme Court it was urged that the order of the Assistant Collector having not been challenged and allowed to become final, the application for refund of duty would not be maintainable. Considering Rule 11 of the Central Excise Rules which conferred a right on the person to refund, the Supreme Court held that the right of appeal is a substantive right and if the same is not availed against an order of assessment and is allowed to become final, the application for refund would not lie now and the appealable order cannot be challenged in the proceedings for refund. The relevant observations are as under : "........ there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statut....
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.... it was held as follows : "Once an order of assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an appeal, that order stands. So long as the order of assessment stands the duty would be payable as per that order of assessment. A refund claim is not an appeal proceeding. The officer considering a refund claim cannot sit in appeal over an assessment made by a competent officer. The officer considering the refund claim cannot also review an assessment order..........The words "in pursuance of an order of assessment" only indicate the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an order of assessment to claim refund. These words do not lead to the conclusion that without the order of assessment having been modified in appeal or reviewed a claim for refund can be maintained." 34. Thus as held by the Supreme Court in Flock India and Priya Blue, the assessment order, which became final without there being a challenge in the appeal, that must be given effect to. Conversely if the assessment order itself enabl....