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Judgment
Binu Tamta, J
The challenge in the present appeal is to the rejection of the refund claim of Rs.77,36,325/-.
The genesis of refund claim by the appellant relates to the provisional assessment of Bill of Entry, B/E No.F-42 dated 09.10.2002, whereby the appellant had imported petroleum products, crude oil, etc., and stored them in the bonded warehouse. Later, the final assessment of the warehoused B/Es were done by order dated 06.01.2009, 02.04.2009 and 31.08.2009, which resulted in excess payment of customs duty by the appellant. The appellant then filed four refund claims as under:
i) 21.07.2009 - Rs. 76,21,139/- (later corrected as Rs.78,53,423/-)
ii) 24.07.2009 - Rs. 55,91,777/-
iii) 16.09.2009 - Rs.35,49,386/-; and
iv) 05.03.2010 - Rs.33,15,827/-
The Assistant Commissioner rejected the claims on the ground that the claims were finalised by the Superintendent, Vadiner, who is not the proper officer and further the appellant failed to produce the document evidencing that they have not passed on the incidence of duty to its buyers. On challenge, the Commissioner (Appeals), Air Cargo Export, NCH, New Delhi, vide order dated 31.03.2011 set aside the assessment order and restored the refund claims to be considered afresh by the Assistant/Deputy Commissioner (Bond). The Assistant Commissioner vide order dated 02.04.2013 passed the final re-assessment order under Section 18 of the Customs Act, 1962, which is reproduced here :-
Final Re-assessment Order
(Under Section 18 of the Customs Act, 1962)
(M/s. Indian Oil Corporation Limited, Panipat Refinery has filed request for re-assessment of the under-mentioned Ex-Bills of Entry under directions of Hon’ble Commissioner of Customs (Appeals), NCH, New Delhi vide their Order-in-Appeal No.CC(A)/CUS/EXP/93-99/2011 dated 31.03.2011)
Sl. No.
Ex-Bond B/E No.
Ex-Bond B/E Date
Customs Duty Paid
Customs Duty in Final Assessment
Customs Duty in Reassessment
Total Refund/Pa yable Due
Refund Payable in Final Assessmen t
Balance duty Refund/Pa yable.
1.
2.
3.
4.
5.
6.
7.
8.
9.
(6-4)
(5-4)
1.
F-61
03.02.2005
135483796
136077756
136024897
-541101
-593960
52859
2.
F-42
09.10.2002
253284776
252065998
252001759
1283017
1218778
64239
3.
F-49
14.08.2001
240108165
238991805
237250310
2857855
1116360
1741495
4.
F-84
24.12.2001
176762901
180097862
179400992
-2638091
-3334961
696870
5.
F-86
31.12.2001
1787955397
178486499
178044223
751174
308898
442276
6.
F-89
18.01.2002
175714798
168114173
167445428
8269370
7600625
668745
7.
F-93
09.02.2002
202268465
203167296
202278153
-9698
-898831
889143
8.
F-58
06.09.2001
238878709
239929170
238819587
59122
-1050461
1109583
9.
F-97
09.01.2001
222708594
221755176
2206731168
2035426
953418
1082008
10.
F-74
14.11.2000
284290736
282399655
282164562
2126174
1891081
235093
11.
F-43
28.07.2000
210387238
187563762
186889131
23498107
22823476
674631
12.
F-11
20.05.2002
254203122
244151875
239684168
14518954
10051247
4467707
13.
F-71
12.08.1998
83039287
68087329
67637890
15401397
14951958
449439
12574088
From the aforesaid chart, the amount specified against B/E No.F-42 is only Rs.64,239/- and the total amount assessed was Rs.1,25,74,088/-, which the appellant could have claimed as refund of customs duty paid in excess. On 10.05.2013, the appellant filed the refund claim for Rs.2,03,10,413/-, however, the Assistant Commissioner vide order dated 16.09.2013 sanctioned the amount of Rs.1,25,74,088/- as finally assessed by order dated 02.04.2013 and rejected the balance amount of Rs.77,36,325/-. The observations of the Deputy Commissioner relating to the claim of Rs.77,36,325/- are quoted below:-
“17. The Deputy Commissioner (Bond), NCH, New Delhi has finalized the duty refundable to Rs.6,76,11,716/- out of which refund of Rs.5,50,37,628/- has already been claimed by the party after finalization of provisional assessment, vide order-in-original No. R-13/2008 dated 31.03.2008, R-25/2008 dated 30.06.2008, R-26/2008 dated 11.07.2008, R-28/2008 dated 28.07.2008, and sanctioned by the then Assistant Commissioner of Refund, ACE, NCH, New Delhi. Hence, the amount of admissible amount of refund claim comes to Rs. 1,25,74,088/-whereas on dt. 10.5.2013, the party has filed the refund claim amounting to Rs.2,03,10,413/- instead of Rs.1,25,74,088/-. During scrutiny of the refund claim of Rs. 2,03,10,413/-, it has been found that in the final assessment order dt.02.04.2013 recommended the refund claim which is to be sanctioned to the claimant amounting to Rs.1,25,74,088/-. It has also been found that refundable amount against Bill of entry No. F-42 dt.9.10.2002 has been mentioned in order dt. 02.04.2013 as 64,239/- whereas the party has claimed the refund towards Bills of entry No. F-42 dt. 9.10.2002 amounting to Rs. 78,00,564/-. The plea of the claimant is that the claim has been filed by us on the basis of Re-assessment order No. VIlI(48-27/VDRJ07-08 issued dated 6.1.2009 issued under section 18 of the Customs Act, 1962 & Amendment letter No. VII/48-27/VDR/07-08 dated 2.4.2009 regarding amendment to re-assessment order No. VII(48-27NDR/O7-08 dated 06.01.2009, on dt. 21.07.2009 and the said re-assessment order was further amended vide order No. VIII(48-27/VDR/07-08 issued dated 6.1.2009 vide letter C.No. VIIl/48-27/07-08 dt. 31.8.2009 in which the refundable amount against the Bills of entry No. F- 42 dt. 9.10.2002 was Rs.78,00,564/-. But the fact is that said amendment letter C No. VIII/48-27/07-08 dt. 31.08.2009 is not available in the original refund claims as the same was not submitted by the claimant at the time of respective initial refund claims filed on dt. 21.07.2009. The same was neither submitted at the time of personal hearing before the Assistant Commissioner of Customs (refund), New Delhi nor it was submitted at the time of filing of appeal memorandum before the hon'ble Commissioner of Customs (Appeals), New Delhi. Therefore, the same cannot be entertained at this stage and thus, the benefit involved in amendment letter C No. VIII48-27/07-08 dt. 31.08.2009 is not tenable to the claimant against the Bill of entry No. F-42 dt. 09.10.2002. The claimant is eligible for refund claim of Rs.64,239/- instead of Rs. 78, 00,564/-. Therefore, out of refund claim of Rs. 2,03,10,413/-, the refund claim amounting to Rs. 77,36,325/- is not admissible and the same is liable for rejection on the aforementioned grounds.”
The appellant then filed a fresh refund application on 06.04.2018 for the balance amount of Rs.77,36,325/-, which has been rejected as being filed beyond the period of one year from the final reassessment order dated. The appeal challenging the said order has been rejected by the impugned order-in-appeal no.D-I/ Gr.7/308/2019 dated 26.08.2019.
We have heard Shri Chandan Kumar, learned Consultant on behalf of the appellant and Shri Rajesh Singh, learned Authorised Representative for the respondent/Revenue and perused the records of the case and the judgements cited at the par.
The crux of the arguments on behalf of the appellant is that in case of provisional assessment under Section 18, provisions of Section 27 of the Act are not applicable and, therefore, the refund sanctioning authority is required to suo-moto grant refund without insisting on filing of refund application or taking into account, if there is any delay in filing the said application. Thus, there is no requirement to follow the procedure as prescribed in Section 27 of the Act. The learned Consultant on behalf of the appellant submitted that it was not proper on behalf of the sanctioning authority to have insisted that the amendment order dated 31.08.2009 should have been attached with the refund application dated 21.07.2009. According to him, the relevant amendment dated 31.08.2009 issued by the Assessing Authority was submitted to the refund sanctioning authority on 29.12.2009 along with the written submissions.
The learned Authorised Representative reiterated the findings of the Authorities below and submitted that the order dated 16.09.2013 had rightly allowed the amount of refund as finally re-assessed by the order dated 2.04.2013 passed by the Assistant Commissioner and rejected the amount of Rs.77,36,325/-. The refund claim has, therefore, attained finality as no appeal was filed against the order of final re-assessment dated 02.04.2013.
There is no quarrel with the proposition that as per Section 18 of the Act, any refund arising out of the final assessment has to be allowed without any claim or application for the same and there is no need for filing a refund claim. In support, reliance has been placed on the decision of the Tribunal in their own case, which has been affirmed by the Delhi High Court and further affirmed by the Apex Court, the details whereof are as :
(i) Indian Oil Corporation Ltd. Vs. CC, New Delhi, 2011(269) ELT 405 (Tri.-Del.)
(ii) CC Vs. Indian Oil Corporation, 2012(282) ELT 368 (Del.)
(iii) CC Vs. Hindustan Zinc Limited, 2023(384) ELT 626 (SC)
Before adverting to the issue of entitlement of refund as claimed by the appellant, we may consider the decision of the Apex Court in Mafatlal Industries Ltd., 1997 (89) ELT 247 (SC) dealing with refund claims consequent upon finalisation of provisional assessment and in para-104, it has been held as under:-
“104. Rule 9-B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that “when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be”. Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9-B will not be governed by Section 11-A or Section 11-B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11-B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9-B(5) re- agitating the issues already decided under Rule 9-B -assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11-B. It follows logically that position would be the same in the converse situation.”
The later part of the observations of the Apex Court that if an independent refund claim is filed after the final decision under Rule 9B(5) re-agitating the issues already decided under Rule 9B assuming that such a refund claim lies and is allowed, the same would be governed by Section 11 B, squarely applies in the given situation.
We may also take note of the decision of the Delhi High Court in the appellant’s own case Commissioner of Customs Vs. Indian Oil Corporation, which accepted the distinction drawn by the Gujarat High Court in the case of Hindalco Industries Ltd, 2008 (231) ELT 36 (Guj) by citing two situations as under:-
“9.1 Referring to Explanation II to Section 27 of the Act it was submitted that the same would apply to a case where after the final assessment and the adjustment, if still the assessee is not satisfied with the adjustment and claims excess amount as refund. Explanation II will have no application in cases where admittedly after final adjustment, refund is due to the assessee. This is explained with the following illustration :
Duty paid provisionally Rs.100
Duty finally assessed Rs.60
Duty to be refunded Rs.40
In this case Explanation II will have no application since no claim for refund is made and Rs. 40 is to be refunded since the same is admittedly due.
Duty paid provisionally Rs. 100
Duty finally assessed Rs. 70
According to assessee correct duty payable Rs. 60
In this case, admitted amount of refund of Rs. 30 would be returned and if the assessee seeks to claim Rs. 10 also (Rs. 70- Rs. 60) as refund, then Explanation II would apply and the said claim is to be preferred within six months from the date of adjustment of duty. This position is precisely dealt with and explained in the second portion of paragraph No. 104 of judgment in case of Mafatlal Industries (supra).”
“20. The two situations are relevant and important. In the first situation the assessee has paid provisional duty which gets reduced on final assessment. The assessee, therefore, becomes entitled to refund which is payable in terms of Rule 9B of the Excise Act [(sic) Rules], 1944 or Section 18 of the Act. For refund on this account, no application is required to be filed under Section 27 of the Act and therefore, sub-section (2) is not applicable. In the second situation, the assessee becomes entitled to additional refund on account of appellate orders or orders passed by a court. In this situation, the assessee is under an obligation to file an application under Section 27 of the Act, the limitation period accordingly applies and doctrine of unjust enrichment is also applicable. Explanation II to Section 27 of the Act deals with the 3rd category of situations. Such situations may occur after the passing of the final assessment, on account of rectification under Section 154 of the Act or because of any other reason, as a result of which the final order suffers an amendment or a change and some-amount becomes refundable. As far as Section 18 of the Act is concerned, when an amount becomes refundable after a final order is passed, the same has to be refunded immediately and for this purpose the assessee is not required to move an application under Section 27 and accordingly sub-section (2) to Section 27 would not apply. It is in this situation that the legislature has intervened and has now inserted sub-sections (3), (4) and (5) to Section 18 w.e.f. 13-7-2006. These insertions obviously are not applicable to the case in hand as they do not have retrospective effect. It was so held in TVS Suzuki Ltd. (supra) when similar amendments were-made in Rule 9B of the Rules passed under the Central Excise Act w.e.f. 25-6-1999. However, in 1999, the legislature did not make corresponding amendment in Section 18 of the Customs Act. These amendments were made w.e.f. 13-7-2006.”
The instant case is squarely covered by the second situation given in the illustrations by the Gujarat High Court in Hindalco Industries (supra), as the refund has been sanctioned in terms of the final re-assessment order but according to the appellant the refund payable is higher. In respect of B/E No.F-42 though the amount claimed by the appellant is Rs.76,36,325/-, however, the amount assessed by the Assessing Officer is Rs.64,329/-, so in order to claim any amount beyond what has been assessed, the appellant will have to comply with the conditions under Section 27 as per the second situation referred above.
The peculiar facts of the present case are that on remand by the Commissioner (Appeals) on 31.03.2011, final re-assessment order dated 02.04.2013 was passed by the Assistant Commissioner. The amount paid in excess by the appellant was finally re-assessed and, therefore, the refund was allowed in consonance to the amount so assessed by the Adjudicating Authority. The refund sanctioning authority could not have gone beyond the assessment order and hence, there was no error in the order dated 16.09.2013 rejecting the refund of Rs.77,36,325/- as it was not part of the final re-assessment order. If the appellant had any grievance against the final re-assessment order, the proper remedy would have been to have challenged the same and get the final reassessed amount modified, however, as observed in Mafatlal Industries (supra) and by the Gujarat High Court followed by the Delhi High Court, the assessee would be liable to file an application under Section 27 of the Act and the provisions of the limitation period and the principle of unjust enrichment would be applicable. The appellant is, therefore, not entitle to the refund as claimed and the same have been rightly rejected by the Authorities below.
Having concluded that the final re-assessment order had attained finality and the refund could have been ordered within the four corners of the said order, we are guided by the decision of the Apex Court in the case of Priya Blue Industries Vs. Commissioner of Customs, 2004 (172) ELT (145) (SC) and ITC Ltd. Vs. Commissioner of Central Excise, Kolkata, 2019 (368) ELT 216 (SC) that all assessments, including self assessments are appealable and, therefore, unless the same is modified, no refund could be sanctioned so as to alter the assessment on the principle that refund proceedings are in the nature of execution proceedings and it is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise.
We, therefore, do not find any merit in this appeal, and accordingly the same is rejected.