TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 771
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....rovisions of law, when the respondent has itself prayed for refund by filing application in prescribed form on 05.08.2022 and also accepted that they have done a mistake in filing of the shipping bills and consequently they have even approached the Hon'ble Court for setting aside the orders passed against them and when as per the direction of the Hon'ble Court such shipping bills have been rectified then only the question of grant of refund arises as on the date when the adjudicating authority reassessed the shipping bills and as such the order of the Learned Tribunal cannot be sustained in law? B. Whether the Learned Tribunal has gone beyond its jurisdiction to award interest @12% p.a w.e.f 11.01.2011 till 5/6.09.2023 when admittedly the amount of excess duty to be refunded to the respondent only crystallized on 05.09.2023 and when the refund amount was crystallized as on 05.09.2023 then the corresponding obligation to pay statutory interest will only commence w.e.f. 06.12.2023 and as such, the order of the learned Tribunal is against the legal principles of law, perverse and in violation of natural justice? C. When the respondent has itself admitted that....
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.... respondent paid the custom duty as per the self-assessment made which was accepted by the Department and the goods were cleared for the purpose of export. When the exports are affected the duty payable was at the rate of Rs. 300/- per metric ton. In terms of the exemption notification No. 62 of 2007-Customs dated 03.05.2007 the export duty was fixed at Rs. 50/- per metric ton on iron ore fines having iron content 62% and below. In respect of the 12 shipping bills filed by the respondent they had declared the duty payable at Rs. 300/- per metric ton and this self-assessment was accepted by the Department as they declared iron content was more than 62% in every consignment and the respondent had paid the duty accordingly and the goods were allowed to be exported. After a lapse of more than a year of the export shipment, the respondent vide letter dated 1st October, 2009 requested the Assistant Commissioner of Customs, Export Department, Customs House, Kolkata stating that certain errors have occurred in respect of the iron content in the 12 shipping bills and sought for rectification. By reply dated 04.06.2010, the Department informed the respondent that there was no mistake either ....
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....ide the order rejecting the refund application dated 05.01.2023 and remanding the matter back to the adjudicating authority to implement the order of the Tribunal dated 28.07.2022 within a timeframe by passing a reasoned and speaking order after giving opportunity of hearing to the petitioner or its representative. Pursuant to the directions issued in the writ petition as well as the directions issued by the Tribunal the Assistant Commissioner of Customs (Exports) by order dated 05.09.2023 reassessed the 12 shipping bills and extended the benefit of the Notification No. 6/2007-Customs dated 03.05.2007 and refunded the excess amount paid by the respondent, by sanctioning a refund of Rs. 6,93,69,000/-. After the order dated 05.09.2023 passed by the adjudicating authority the Department on 06.09.2023 refunded the excess duty to the respondent through online bank transfer. Subsequently, the respondents submitted a letter dated 13.09.2023 for payment of interest alleging that interest is payable on account of the delay in effecting refund. The Assistant Commissioner of Customs (Exports) by order dated 27.11.2023 rejected the claim for interest holding that the reassessment of the shippi....
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....ce the correction/amendment sought by the respondent related to shipping bills filed on various dates and the respondent cannot be heard to say that they have made wrong declarations on various shipping bills on various dates and realized their mistake only on 1st of October, 2009 which is more than one year after the filing of the shipping bills and the exports had already been effected. Therefore, it is contended that the issue as to whether for the fault on the part of the respondent or whether the appellant Department is liable to pay interest on the alleged outstanding sum from 11.01.2011 when the amount to be paid back to the respondent did not crystalize or in other words become payable. It is submitted this aspect of the matter has been totally ignored by the learned Tribunal. Further, it is submitted that the finding rendered by the learned Tribunal that the respondent is not required to file this statutory form No. 102 for refund is an erroneous finding, as there is no other procedure under the Customs Act to claim refund except by way of filing the statutory form. Furthermore, the finding rendered by the learned Tribunal with regard to the order of the Commissioner of Cu....
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....by levy of normal rate of duty on the declared weight inclusive of moisture and the same was accepted by the respondent and the duty was paid. The respondent had at no point of time raised any objections and all the documents called for by the department were submitted. Furthermore, the learned tribunal ought to have noted that the adjudicating authority categorically held that there was no provisional assessment on the shipping bills since no dispute was raised by the respondent with regard to the applicable rate of duty at the time of assessment of the shipping bills which were in fact, self-assessed by the respondent by mentioning the weight of the goods. The refund application dated 05.08.2022 was disposed by in terms of the order passed by this court dated 06.07.2023 by sanctioning refund. 7. It is further reiterated that in terms of Section 27 of the Customs Act, it is mandatory for filing an application for refund in the statutory form and such application has to be made before the expiry of one year from the date of payment of such duty or interest and the limitation shall not apply if the duty or interest has been paid under protest. The learned tribunal erred in not co....
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....ed to the respondent and the question of payment of interests does not and cannot arise. 9. The learned advocate appearing for the respondent submitted that the respondent in all the shipping bills indicated the iron content to be 63.5% DMT with moisture content of 9% approximate which would be less than 62% in weight metric tonne (WMT) on which the export duty of Rs. 50 per metric tonne would be legally payable. The assesse submitted all relevant documents to establish that export duty of Rs. 50 PMT was payable and this was mentioned in their letter dated 18.05.2009 which was submitted to the department on 26.05.2009. In the said letter, reference was made to the decision of the Hon'ble Supreme Court in Union of India Versus Gangadhar Narsingdas Agarwal (1986) 26 ELT 918 (Del) and also in the assesses own case in order in appeal dated 18.09.2008 passed by the Commissioner of Customs (Appeals), Kolkata. Further the respondent stated that since the issue is already settled by the Hon'ble Supreme Court in the aforementioned decision and the shipping bills having been assessed without taking note of the decision, the authority was empowered to make rectification of error in assessm....
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....and 27A of the Act are inapplicable. Reliance was placed on the decision of the High Court of Bombay in Keshari Steels Versus Collector of Customs, Bombay (2000) 115 ELT 320 (Bom) wherein it was held that when amount was paid in excess due to error which could be rectified under Section 154, there is no applicability of Section 27 and the limitation period therein is not applicable. The special leave petition filed against the said decision was dismissed on the ground of delay as well as on the merits and reported in 2000 121 ELT A139 (SC). The decision in Keshari Steel was followed by the High Court of Karnataka in DHL Express India Private Limited Versus The Commissioner of Service Tax, Bengaluru Service Tax-I (2021) 377 ELT 594 (Kar). Further by placing reliance on the decision in Commissioner of Central Excise (Appeal), Bangalore Versus KVR Construction (2012) 26 STR 195 (Kar), it is submitted that the amount was paid erroneously the same would not be a duty or tax and Section 11B of the Central Excise Act which is pari materia to Section 27 of the Customs Act will not apply. The said decision was followed by the High Court for the State of Telangana in Vasudha Bommireddy Versu....
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....e a radical change with effect from 08.04.2011 whereas the exports pertain to period prior to 2011. With this reasoning the appeal filed by the revenue was dismissed observing that no substantial questions of law arose. 14. Reliance was also placed on the decision of the Hon'ble Supreme Court in Union of India Versus Kamlkashi Finance Corporation Limited (1991) 55 ELT 433 (SC). Further it is contended that the department cannot place any reliance on the statutory rate of interests at 6% considering the facts and circumstances of the case and in as much as the revenue withheld the amount for 14 years and at best, the same can be considered to be "deposit" and not "duty paid". Therefore, the learned tribunal was fully justified in directing the payment of interests at 12%. In this regard, reliance was placed on the decision in Sandvik Asia Limited (supra), Commissioner of Income Tax Versus Gujarat Fluoro Chemicals (2014) 14 Taxmann.com 1 (SC) which clarified the decision in Sandvik Asia Limited and the decision in Union of India Versus Willowood Chemicals Private Limited (2022) 60 GSTL 3 (SC). Reliance was also placed on the decision of this Court in Dulichand Shreelal Versus Coll....
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....epartment dated 17.08.2023 calling upon the respondent to submit all connected documents and the respondent in response submitted the required documents and immediately thereafter the adjudicating authority sanctioned the refund on 05.09.2023 and the same was paid to the respondent on 06.09.2023 and therefore, the question of payment of interests does not arise. 16. It is submitted that the decision in Sandvik Asia Limited will not apply to the respondent's case as in the case on hand the assessing officer assessed the shipping bills based on the respondent own declaration and the duty was paid by the respondent voluntarily to get goods cleared for export. Therefore, the inaction and/or omission on the part of the respondent cannot be shifted to the department. It is further submitted that the decision in Riba Textiles and EBIZ.Com Private Limited are not applicable to the cases on hand as in those case the issue was whether interest was payable when the amount/duty was paid/deposited during investigation and adjudication and at the time of entertaining the stay application or payment made involuntarily under threat of arrest during investigation. These decision are factually di....
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....the show cause notice for 25 years which was held to be in contravention of procedural fairness and therefore, therein was held to be entitled to be refund of the amount deposited in the course of investigation with 12% interest per annum from the date of deposit upto the date of refund. With the above submissions, the learned advocate appearing for the appellant prayed for allowing the appeal, setting aside the order passed by the learned tribunal and answering the substantial questions of law in favour of the revenue. 19. We have elaborately heard Mr. Bhaskar Prosad Banerjee, learned Senior Standing Counsel and Mr. Tapan Bhanja, learned Standing Counsel for the appellant Department and Mr. Rajeev Kumar Agarwal, learned Advocate assisted by Mr. Sanjay Dikshit, learned Advocate appearing for the respondent. 20. The issue which falls for consideration is whether the respondent was entitled to interest on the amount refunded to them and if they are so entitled from what date the interests is payable and at what percentage. 21. Section 27 of the Customs Act, 1962 (the Act) deals with claim for refund of duty. Sub Section (1) states that any person claiming refund of any duty ....
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....ed to be filed since the refund is only consequential action after the rectification is carried out. This finding virtually negates the statutory provisions namely Section 27(1) of the Act and therefore has to be held to be erroneous finding. 23. Having held that the refund claim cannot be processed without the application in the statutory form, it is required to be seen as to how such a form should be processed by the prescribed authority. In Sandvik Asia Limited, it was held that the award of interest on the refunded amount is per statutory provisions of the law as it stood and on the peculiar facts and circumstances of each case. It was further held that a specific provision has been made under the statute, such provision has to govern the plea and therefore the court has to take all relevant factors into consideration while awarding the rate of interest on the compensation. 24. Therefore, two things have to be borne in mind namely the statutory provisions and the facts of the case on hand to determine the issue as to whether the respondent would be entitled to payment of interest and if the question is answered in the affirmative then the date from which he is entitled fo....
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....ry right to claim payment of interest on delayed under the Act and it is only after the insertion this statutory provision was incorporated in the statute. Thus, a combined reading of Section 27(1)and (2) and the explanation in Section 27A manifest that any person claiming refund of the duty or interest paid by him or payment by him is required to make an application in such form and manner as may be prescribed for such refund to the authority which has been specified namely the Assistant Commissioner of Customs or Deputy Commissioner of Customs within the time stipulated under the statute. On compliance with these requirement under Sub Section (1) of Section 27 in terms of Sub Section (2) of Section 27, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied that the whole or any part of the duty and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the fund. In terms of the proviso, instead of the amount being credited to the fund it will be paid to the applicant if such amount relates to anyone of the payment as contained in Clauses (a) to (g) in....
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....jection of request for rectification made under Section 154 of the Act. The department cannot be prevented from raising their contentions both legal and factual. The consistent case of the department till date of grant of refund by order dated 05.09.2023 is that the request made by the respondent cannot be processed under Section 154 of the Act. In law, if the department is entitled to take such stand, they cannot be penalized for doing so and availing the hierarchy of remedies and though ultimately, they were unsuccessful the time spent while exercising the statutory remedies available cannot be rekoned and put against the department alleging inordinate delay. 30. The department is right in contending that the amount of refund got crystalized for the first time only after Order-in-Original dated 05.09.2023 was passed. Prior to that neither the order of the Commissioner of Appeals nor the tribunal nor the court quantified the amount or crystalized the amount of refund to which the respondent was entitled to. Therefore to allege that the department had slept over the matter is a wrong conclusion considering the facts and circumstances of the case. As could be seen from the dates ....
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.... duty paid and exports effected. Though much could be said on the conduct of the respondent, we are precluded from doing so since the order of refund has already been passed by the authority. Nonetheless the conduct of the respondent also has to be borne in mind. The delay as to why they submitted a letter for rectification only on during October 2009 is not forth cominig. The respondent contended that the bills of entry were provisionally assessed and what was paid by them is not payment but a deposit. This submission is contrary to the facts as the bills of entry were self-assessed and such assessment was accepted by the department and based on such assessment duty was computed, the same was voluntarily paid by the respondent and the goods were permitted to be exported. Therefore, it would be too late in the day for the respondent to contend that the assessment of the bills of entry at the first instance was a provisional assessment. Furthermore, the respondent cannot dispute the fact that they deposited the export duty voluntarily and not under protest nor claimed the benefit of notification No. 62/2007 dated 03.05.2007. The question of provisional assessment would come in when ....
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....y agreed with the assessment, paid the duty and the goods were permitted to be exported. It is also not in dispute that there was no provisional assessment by the proper officer and no representative samples was drawn for analysis at the authorized laboratory. The respondent had filed WPO 636 of 2023 challenging the adjudication order dated 05.01.2023 passed pursuant to the order of remand by the tribunal dated 28.07.2023. The tribunal after referring to the decision of the Hon'ble Supreme Court in Gangadhar Narsingdas Agarwal set aside the original authority order allowed the appeal by way of remand to the original authority with a direction to pass a speaking order, finalising the assessments. There was also a direction of granting a releif as per the Notification No. 62/2007-Cus dated 03.05.2007 by taking into account the test report; needless to reiterate that consequential benefits if any, be given to the respondent herein as per law. It appears that the tribunal was not apprised at that juncture that no representative were drawn and there was no tests report. The learned writ court took note of the direction/observations made by the Division Bench in CUSTA No. 2 of 2023 dated....
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....1. The revenue on the other hand would contend that refund payable to the respondent got crystalized only on and after the order-in-original dated 05.09.2023 and in terms of the said order the refund was effected to the respondent on 06.09.2023. 35. To arrive at the correct factual and legal position, we propose to examine the scope of the orders passed by the various authorities from time to time. Though it is stated that the respondent had filed a letter on 26.05.2009, the request made in the letter could not have been acted upon by the department as the application is required to be filed for invoking the power under Section 154 of the Act. This application was filed by the respondent on 01.10.2009. The Deputy Commissioner (Exports) by order dated 04.06.2010 held that on verification of the related documents it is seen that the shipping bills in question were assessed based on the declaration of the exporter (respondent). With regard to the description of the goods, percentage of iron content, quantity etc. and the related documents submitted at the time of assessment included the invoice, pre-shipment inspection certificate etc. and it is seen that there was no mistake cleri....
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....order/give decision after providing opportunity to the appellant. Thus the appeal was allowed on the above terms. 37. On plain reading of the order passed by the appellate authority dated 06.10.2010 it is clear that the direction issued to the Deputy Commissioner did not divest his powers to take a decision on merits and the appellate authority had guided the Deputy Commissioner to consider and determine whether the case of the respondent fits under the error arising out of an omission and in doing so, the Deputy Commissioner was required to take note of the decisions referred to by the appellate authority in his order which are essentially the decision which were relied on by the respondent at the time of personal hearing. Therefore, the tribunal erred in coming to the conclusion that the rectification was first ordered by the Commissioner (Appeals) in his order dated 06.10.2010. This finding is factually incorrect. 38. The original authority upon such remand passed the order-in-original dated 11.05.2015 noted the facts of the case, Section 154 of the Act, the Board Circular No. 4/2022-Cus dated 17.02.2012 and held that at no point of time there was any omission on the part ....
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....herein it was held that not claiming exemption benefit is not a clerical error, and it can be brought into when there is accidental omission arithmetical error, calculation error, exchange rate not calculated and incorrect currency noted and payment of customs duty without claiming exemption benefit is not covered under Section 154. In the light of the said discussion, the authority namely Assistant Commissioner of Customs by his order dated 11.05.2020 rejected the request for rectification of the shipping bills under Section 154 of the Act as there was no clerical or arithmetical error or accidental slip or omission made by the assessing officer. The respondent carried the matter on appeal before the Commissioner of Customs (Appeals), Kolkata. The appeal was dismissed by order dated 13.05.2016. 41. In the interregnum, the respondent filed the writ petition before this Court challenging the order dated 11.05.2015 passed by the Assistant Commissioner rejecting the prayer for rectification. The learned advocate for the respondent is not able to place the copy of the order passed in the writ petition nor the case number or date but would submit that the writ petition was dismissed ....
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....oluntarily and the goods permitted to be exported. Thus, the order passed by the learned tribunal dated 28.07.2022 is not a positive direction to the authority by directing re-assessment of the shipping bills and calculating the correct amount of duty payable and computing the excess duty paid by applying Notification 62/2007 and refunding the excess duty collected from the respondent. In the absence of any such positive direction, direction issued by the tribunal it cannot be interpreted to be a direction to carry out re-assessment when the matter stood remanded to the original authority. After considering the direction issued by the learned tribunal and the submissions of the respondent the original authority passed an order on 05.01.2023 stating that none of the shipping bills the respondent claimed benefit of Notification No. 62/2007-Cus. Further there is no mention of any test report in the shipping bills and the corresponding documents submitted by the respondent. The assessment was done on the basis of declaration made and related documents submitted by the respondent and duty was levied at the rate of Rs. 300/- per metric tonne on the declared iron content which was more th....
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....the refund application was rejected by the original authority. The learned writ Court while disposing of the writ petition by order dated 28th June, 2023 opined that the adjudicating authority has not acted strictly as per the findings, observations and directions given by the Tribunal, rather it has given its own reasons and opinion and not implemented the order of the Tribunal in its letter and spirit and accordingly set aside the order-in-original dated 05.01.2023 and remanded the matter back to the adjudicating authority to implement the order of the Tribunal dated 28.07.2022 strictly as per findings, observations and directions given by the Tribunal and particularly giving relief to the respondent (petitioner therein) as per notification 62/2007-Cus as per paragraph 8 of the order of the Tribunal within a timeframe by passing a reasoned and speaking order after giving opportunity of hearing to the respondent or its authorized representative. Thus, a plain of the order passed in the writ petition dated 06.07.2023 it is seen that there was no positive direction for refunding the excess duty paid but the matter was remanded back to the original authority with a direction to him t....
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....gned order granted larger relief to the respondent by allowing interest from 11.01.2011 whereas the appellate authority directed to compute the time limit for sanction of interest from the date of the Tribunal's order dated 28.07.2022. 49. Entire facts and purport of the various orders which have been set out above will clearly demonstrate that the refund payable to the respondent got crystalized only after the order dated 05.09.2023. Therefore, to shift the date to an anterior date prior to the date on which refund got crystalized would tantamount to rewriting the statutory provision and rendering Section 27 and 27A negatory. That apart, by operation of law (i.e.) in terms of Sub-Section (2) of Section 27, the date gets postposed to the date of reassessment order which was passed on 05.09.2023. 50. At this juncture, it is beneficial to take note of the decision of the Hon'ble Supreme Court in ITC Limited wherein the Hon'ble Supreme Court held that it is apparent from the provisions of refund that it is more or less in the nature of execution proceedings and it is not open to the authority which processes the refund to make a fresh assessment on merit and to correct assessmen....
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....est from an anterior date when the refund did not get crystalized in favour of the respondent. The learned Advocate appearing or the respondents had relied upon various decisions before the Tribunal some of which were also relied upon before this Court, namely, Sandvik Asia Ltd., Riba Textiles Ltd., Parle Agro Pvt. Ltd., Keshari Steels, DHL Express India Pvt. Ltd. 51. In Sandvik Asia the facts are different and it was not a case where the assessment of the shipping bills was made based on the declaration of the assessee. The decision in Riba Textiles is also distinguishable on facts as it pertained to payment/ deposit of duty during investigation and adjudication. In Keshari Steels the matter pertained to excess recovery by the Department which was on account of error in calculation. This decision cannot be of any assistance to the respondent. The decision in Gujarat Fluoro Chemicals in which the Hon'ble Supreme Court on facts found inordinate delay in refunding certain amounts which included statutory interest and a revenue was ordered to pay compensation and not interest on interest. In Willowood Chemicals Pvt. Ltd. a writ petition was held to be maintainable for payment of in....