TaxTMI 
TaxTMI 
2008 (9) TMI 255
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....n those shown in the original MOA. The bill of entry was provision ally assessed on execution of bond with bank guarantee for the entire disputed amount of Rs. 7,29,709/ (b) The provisional assessment was finalized by the Superintendent by his order dated 28-5-1998 adopting the original higher price and holding that the differential duty of Rs. 7,29,709/- was payable. In pursuance of the said order of finalization of provisional assessment, the bank guarantee already given was en-cashed and credited to the Government account. (c) The party filed an appeal with Commissioner (Appeals) against the order of the Original Authority dated 28-5-1998 and got a favourable order from Commissioner (Appeals) vide his order dated 2-12-1999. (d) In pursuance of the said order of Commissioner (Appeals), a refund claim was filed on 31-7-2000, which was rejected by the Original Authority on the grounds that the claim is time-barred; and that the appellant has availed a sum of Rs. 4,54,347/- out of the total amount of Rs. 7,29,709/- as Modvat credit and even in respect of the balance amount they have not crossed the bar of unjust enrichment. (e) On appeal by the party, Commissioner (Appea....
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....While the appellant has filed an appeal against the final assessment order dated 28-5-1998, it has not been shown that they have also preferred a refund claim within the limit prescribed after finalization and recovery of the amount. The order of the appellate authority dated 2-12-1999 decided the disputed assessment in favour of the applicant. The order of the Commissioner (Appeals) does not sanction the refund as such. 6.3 The refund claim has been filed only on 31-7-2000 based on a favourable order in the assessment dispute. The refund claimed was Rs. 7,29,709/-. It is also not disputed that the amount claimed as refund by the appellant included art amount of Rs. 4,54,347/-, which they have taken as modvat credit. On this ground also, it would not be appropriate to hold that the refund claim has arisen directly out of the order of the appellate authority dated 2-12-1999. 6.4 The Original Authority has rightly held that the claim has been filed after the time limit prescribed for filing the refund; having taken and utilized substantial portion of the disputed duty as credit we also hold that they have not discharged the burden of proving that duty burden has not been passed....
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.... on record, as observed by the learned Member (Technical) that the appellant, out of total amount of Rs. 7,29,709/- have availed modvat credit of amount of Rs. 4,64,347/-. I find that the appellant is not claiming refund of the entire amount of Rs. 7,29,709/-, but the refund claim is only of Rs. 2,77,151/-, as is clear from Form CA-3 of the appeal. 11. In view of my above discussion, I set aside the impugned order and allow the appeal with consequential relief to the appellant. Sd/- (Archana Wadhwa) Member (J) Dated 13-3-2008 DIFFERENCE OF OPINION Whether the appeal is to be rejected as held by Member (Technical) or to be allowed as held by Member (Judicial)? Sd/- &nbs....
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....nbsp; Dated 13-3-2008 12. [Per : Justice S.N. Jha, President]. - This appeal has come up for hearing before me on difference of opinion between Member (Judicial) and Member (Technical). The Member (Judicial) has proposed that the appeal be allowed; according to Member (Technical), it is fit to be rejected. 13. None appeared on behalf of the appellant at the time of hearing. They have sent a request letter to decide the appeal on merits and accordingly, the appeal was taken up for hearing. Shri Sameer Chitkara, learned SDR appearing for the Revenue stated the factual background of the case and made submissions on merit. 14. Briefly stated, the....
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....contended that when the appeal is allowed, the appellant is entitled to refund of the pre-deposit and therefore, treating the amount covered by the bank guarantee, since encashed by the Revenue as pre-deposit, the amount may be refunded as a consequence of allowing the appeal. The appellant has also contended that encashment of bank guarantee cannot be regarded as payment of duty and therefore, the provisions of Section 27 of Customs Act in the matter of refund of the excess duty paid, including the provisions as to limitation for filing refund claim, are not applicable. 16. The Revenue also filed cross-objection which is in the nature of submissions and reiteration of its case. 17. The appeal came up for hearing before the Division Bench. On consideration of the matter learned Member (Judicial) observed: "2..... for the purpose of filing an appeal before the Commissioner (Appeals), the assessee was required to deposit the duty amount, in terms of Section 35F, unless specifically waived. The encashing of bank guarantee after passing of order in original, is nothing but pre-deposit of the confirmed dues It is not the case of refund of the duty, requiring making formal appli....
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....eems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or (c) where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary o make further enquiry for assessing the duty; the proper officer may direct that the duty leviable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty finally assessed and the duty provisionally assessed. (2) When the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then- (a) in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed and if the amount so paid falls short of, or is in excess of (the duty finally assessed,) the importer or the exporter of the good....
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....Customs Act. 21. In course of hearing, on behalf of Revenue reliance was placed on a decision of the Bombay High Court in M/s. Bussa Overseas v. UOI - 2003 (158) E.L.T. 135, wherein while considering the scope of the refund provisions under Section 27 of the Customs Act in the context of Section 18, the High Court held that duty determined on provisional assessment is the provisional duty which the importer or exporter is required to pay before clearance of the goods and therefore, what becomes refundable or payable on final assessment is the differential duty between the duty provisionally paid and the duty finally assessed, and hence the refund of duty on provisional assessment is governed by Section 27 of the Custom Act. The decision squarely covers the dispute in hand and it would be useful to extract the relevant observations, in para 29 of the judgment, as under: "29. It was next contended that the refund arising under Section 18 of the Act is not refund of duty and, therefore, Section 27 which applies to refund of duty, is not applicable to the present case. There is no merit in this contention as well. Section 47 of the Customs Act provides for clearance of the goods ....
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.... paid on provisional assessment is the provisional duty and what becomes refundable on final assessment is the differential duty between the duty provisionally paid and the duty finally assessed. Section 27 of the Customs Act, applies to refund of duty paid pursuant to an order of assessment. Section 2(2) of the Customs Act defines the word "assessment" to include provisional assessment. Therefore, refund of duty paid on provisional assessment is squarely covered by Section 27 of the Customs Act." 22. Section 18 thus cannot be read in isolation and any payment by way of appropriation of the security/bank guarantee has to be treated as payment of duty and therefore, any amount found payable or refundable to the importer would be subject to provisions of Section 27 including those relating to time limit for claiming refund. That the provisions of Sections 18 and 27 are intertwined is clear from the fact that under Explanation II to Section 27(1) - where any duty is paid provisionally under Section 18, the limitation (of one year or six months, as the case may be) shall be computed from the date of adjustment of duty after the final assessment thereof. Reading Section 18 de hors Se....
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.... claims except in the case of unconstitutional levy must be filed and adjudicated under Section 27 of the Customs Act. Later on it is held by the Apex Court that even the unconstitutional levy is governed by the principles of unjust enrichment. Therefore, the contention of the Petitioners that Section 27 does not apply to refund due under Section 18 and the Customs authorities are obliged to refund the amount due under Section 18 without the application of Section 27 cannot be accepted." 23. In the instant case, the occasion to file refund claim no doubt arose after the decision of the Commissioner (Appeals) dated 3-12-1999 but then the appellant should have filed the claim within six months therefrom; instead, the claim was filed on 31-7-2000, that is, after expiry of six months which was therefore, clearly time-barred and the authorities below did not commit any error in rejecting the same on that ground. 24. I am also in agreement with Member (Technical) that the appellant was required to establish that the burden of duty had not been passed on. As seen above, the refund claim was rejected by the Deputy Commissioner also on the ground that the refund could be allowed only ....
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....n had not been passed on. As a matter of fact, as seen above, the appellant had taken Modvat credit to the tune of Rs. 4,54,347/- out of the total claim of Rs. 7,29,709/-. 27. In view of my conclusions aforesaid, I would agree with the Member (Technical) that appeal be dismissed. 28. The appeal may now be listed before the Division Bench for pronouncement of the majority opinion and order. (Dictated and pronounced in open Court) Sd /- (Justice S.N. Jha) President FINAL ORDER In view of majority order the appeal is rejected. Sd/-  ....