M/s Kluber Lubrication India Private Limited vs Commissioner Of Customs(Air Cargo)

The appellants are manufacturers of excisable goods falling under various Chapters of the Central Excise Tariff Act, 1985 and are holders of Central Excise Registration also. The appellants procure several inputs from M/s Kluber Lubrication Munchen KG, Germany, for the use in the manufacture of finished goods in India and accordingly, placed a purchase order for purchase of 600 kgs of P-48, a lubrication preparation, at a unit price of 292.68 EUR per 100 kgs against which, the supplier also raised an invoice dated 20.07.2011 quoting the unit price of 292.68 EUR per kg as against per 100 kgs, resulting in a total value of 1,75,608 EUR as against 1757.30 EUR.

It is the case of the appellants that they filed the Bill of Entry dated 25.07.2011 for the clearance of impugned goods and also paid the duty on the value of 1,75,608 EUR as quoted in the invoice dated 20.07.2011 (amounting to Rs.30,09,958/-). Having noticed the above error during the reconciliation of the records, the appellant brought the same to the notice of its supplier, who thereafter issued a credit note dated 30.08.2011 for the excess amount of 289.75 EUR and that the above discrepancy in the unit price had resulted in an excess payment of Customs duty to the extent of Rs.27,81,701/-. This amount of the excess Customs duty paid was claimed as refund vide refund application dated 22.09.2011 whereby, the appellant had also requested the Assistant Commissioner to issue an amended Bill of Entry along with request for sanctioning the refund. The appellants again filed a request for amendment of Bill of Entry vide its application dated 10.10.2011 but however, the Assistant Commissioner vide its Intimation dated 27.04.2012 declined to consider the appellant's request for re-assessment on the ground that "no amendment of Bill of Entry could be permitted once the imported goods have been cleared for home consumption or deposited in a warehouse or the goods have been exported, except on the basis of documentary evidences which was in existence at the time when goods were cleared, deposited or exported as the goods maybe." Aggrieved by the said intimation, the appellant preferred an appeal before the Commissioner of Customs (Appeals), Bangalore, and the Commissioner (Appeals) vide Order-in-Appeal No.164/2012 passed on 28.09.2012 disposed of the said appeal by holding inter alia that the subject case did not come under the purview of Section 154 inasmuch as there was no error; that on enquiry it was proved that the contentions of the appellant as to the error being committed by the supplier was correct; that all the cases of refund of duty had to be dealt with under Section 27 of the Customs Act; that the case would not fall under Section 17(4) of the Customs Act also and that therefore, the appellant has to approach to the lower authority and claim consequential refund subject to the provisions of Section 27 ibid. Accordingly, the appellant approached the concerned authority with a request for granting of refund by enclosing the supporting documents but, however, the adjudicating authority vide Order-in-Original passed on 17.03.2014 rejected the appellant's claim on the ground that the appellant's claim was hit by limitation of time. Seriously, aggrieved by the same, the appellant preferred an appeal before the Commissioner of Customs (Appeals), Bangalore, and the Commissioner (Appeals) vide Order-in-Appeal No. 247/2018 dated 27.06.2018 disposed of the appeal by holding inter alia that the rejection of refund claim on the grounds of limitation was incorrect; that the Department's view was good for import prior to 08.04.2011; that amendment under Section 154 ibid was nothing but a form of re-assessment, etc. The Commissioner (Appeals) also remanded the matter back to the original authority with a direction to pass appropriate and verify the genuinity of unjust enrichment. This order of the Commissioner (Appeals) has become final now with both the Revenue as well as the appellant having accepted the same.

The appellant moved an application dated 03.011.2018 before the Assistant Commissioner (Refund) requesting for refund again with duly supported by documentary evidences also and the Deputy Commissioner (Refund) vide Order-in-Original passed on 16.01.2019 sanctioned the refund as claimed by the appellant. The said authority has also observed in the said Order-in-Original that the Order-in-Appeal No.247 ibid passed by the Commissioner of Customs (Appeals) Bangalore, has been accepted in Review by Committee of Commissioner of Customs, Bangalore on 10.09.2018.

Against the said Order-in-Original, the Revenue preferred an appeal before the Commissioner of Customs, Bangalore, praying to set aside the Order-in-Original on the ground that the sanctioning authority had considered the matter afresh and sanctioned the refund without re-assessment of the duty payable as mandated under Section 17(4) ibid. The appellant also preferred a cross appeal and the Commissioner of Customs (Appeals), Bangalore vide impugned Order-in-Appeal No.21/2020 dated 04.02.2020 allowed the appeal of the Revenue thereby setting aside the Order-in-Original impugned therein. The Commissioner (Appeals) has reasoned that the issue was squarely covered by the Larger Bench decision of the Hon'ble Apex Court in the case of ITC Ltd. Vs CCE, Kolkata IV, 2019 (368) ELT 216 (SC). The Commissioner (Appeals) has also inferred that it was not open to the authority which processes the refund to make a fresh assessment on merit and that any mistake committed by an importer could be corrected under Section 154 ibid by the Assessing Officer and not by the Refund Sanctioning Authority. The said order has been assailed in this appeal of the appellant.

Heard Smt. Sandhya Sarvode, learned Advocate for the appellant and Smt. C.V. Savitha, learned AR for the Revenue and perused the documents placed on record and also gone through the various decisions relied upon during the course of hearing. I agree with both sides that the issue in hand is no more res integra as the same stands covered by the judgment of Hon'ble Apex Court in the case of ITC Ltd. (Supra).

The undisputed fact is that after noticing excess duty payment that the appellant sought amendment of its Bill of Entry which was rejected. On appeal, the said rejection was set aside. Thereafter, the refund was sanctioned in the third round vide Order-in-Original passed on 16.01.2019, which I find as an order in the nature of an order giving effect to the Order-in-Appeal No.247/2018 dated 27.06.2018 passed by the Commissioner of Customs (Appeals). In his order, the Commissioner of Customs (Appeals) has elaborately discussed the issue on hand vis-à-vis the eligibility of the appellant for refund, to hold that even the amendment under Section 154 ibid was nothing but a form of re-assessment and that refund, if any, could flow from it. This speaking order has become final and by this order, the Commissioner has virtually shut Revenue's case on all other possible grounds and, if the Revenue was seriously aggrieved, it is this order against which they should have filed appeal if the same was not in order. Having missed the bus, they cannot transfer their wrath against the Commissioner (Appeals), on the order passed as a consequence to his directions by the adjudicating authority. The other argument that the adjudicating authority had already rejected the appeals request for amendment is also baseless since the order was appealed against and the same is non-est in the eye of the law.

The Hon'ble Supreme Court in the case of ITC Ltd. (Supra) has categorically observed as under:

"47. When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act."

Hon'ble High Court of Bombay, in the case of Dimension Data India Pvt. Ltd. Vs CC and ANR, 2021-TIOL-224-HC-MUM-CUS, had considered the said binding decision of the Hon'ble Apex Court, also considered various other decisions and has ruled as under:

"14. Short point for consideration is whether request of the petitioner for correction of inadvertent mistake or error in the self-assessed Bills of Entry and consequential passing of orders for re-assessment is legal and valid? Corollary to the above is the question as to whether even in a case of this nature, petitioner is required to be relegated to the remedy of appeal?"

......

22.1 . From the question itself, it is clear that the issue before the Supreme Court was not invocation of the power of re-assessment under section 17(4) or amendment of documents under section 149 or correction of clerical mistakes or errors in the order of self-assessment made under section 17(4) by exercising power under section 154 vis-a-vis challenging an order of assessment in appeal. The issue considered by the Supreme Court was whether in the absence of any challenge to an order of assessment in appeal, any refund application against the assessed duty could be entertained. In that context Supreme Court observed in paragraph 43 as extracted above that an order of self-assessment is nonetheless an assessment order which is appealable by "any person" aggrieved thereby. It was held that the expression "any person" is an expression of wider amplitude. Not only the revenue but also an assessee could prefer an appeal under section 128. Having so held, Supreme Court opined in response to the question framed that the claim for refund cannot be entertained unless order 17 of 22 www.taxguru.in 23.os.wpl.249.20.doc of assessment or self-assessment is modified in accordance with law by taking recourse to appropriate proceedings. It was in that context that Supreme Court held that in case any person is aggrieved by any order which would include an order of self-assessment, he has to get the order modified under section 128 or under other relevant provisions of the Customs Act (emphasis ours).

22.2. Therefore, in the judgment itself Supreme Court has clarified that in case any person is aggrieved by an order which would include an order of self-assessment, he has to get the order modified under section 128 or under other relevant provisions of the Customs Act before he makes a claim for refund. This is because as long as the order is not modified the order remains on record holding the field and on that basis no refund can be claimed but the moot point is Supreme Court has not confined modification of the order through the mechanism of section 128 only. Supreme Court has clarified that such modification can be done under other relevant provisions of the Customs Act also which would include section 149 and section 154 of the Customs Act. 18.

In Maharashtra Cylinders Private Limited (supra), a Division Bench of this court also reiterated the proposition that unless an order of self-assessment is varied or altered, question of refunding the duty paid on self-assessment does not arise at all. Validity of an assessment cannot be considered while dealing with a refund claim. Therefore, this decision on the face of it is clearly distinguishable and is not at all applicable to the facts of the present case.

In the instant case, petitioner has not sought for any refund on the basis of the self-assessment. It has sought re-assessment upon amendment of the Bills of Entry by correcting the customs tariff head of the goods which would then facilitate the petitioner to seek a claim for refund. This distinction though subtle is crucial to distinguish the case of the petitioner from the one which was adjudicated by the Supreme Court and by this Court.

Grievance of the petitioner is not on the merit of the self-assessment as the petitioner is aggrieved by the failure on the part of the respondents to carry out amendment in the Bills of Entry by replacing the incorrect 19 of 22 www.taxguru.in 23.os.wpl.249.20.doc CTH by the correct one namely by replacing CTH '85176990' with '85176930' which was declared inadvertently by the petitioner at the time of fling the Bills of Entry. This request of the petitioner, in our opinion, falls squarely within the domain of section 149 read with section 154 of the Customs Act. Upon amendment in the Bills of Entry by correcting the CTH, consequential re-assessment order under section 17(4) of the Customs Act would be in order.

Madras High Court in M/s. Hewlett Packard Enterprise India Private Limited (supra) correctly held that in a case of correction of inadvertent error, the appropriate remedy would be seeking an amendment to the Bills of Entry and not fling of appeal because there is no legal faw in the order of self-assessment amenable to appeal but only a factual mistake which can be rectified by way of amendment or correction. Such correction or amendment has been sought for by the petitioner on the basis of documents which were already in existence at the time of release of the goods for home consumption.

The expression "mistake" appearing in section 154 of the Customs Act may be defined as something done unintendedly or through inadvertence. The section itself says that the error in any decision or order should be due to any accidental slip or omission. Moreover, it can be a mistake of law or a mistake of fact. In all cases it need not be an arithmetical error alone. It may connote errors which can be discerned upon due verification. Having said so, we may also indicate that power to amend documents available under section 149 of the Customs Act read with correction of clerical or arithmetical mistakes or errors in orders due to accidental slip or omission under section 154 thereof is different and distinct from the appellate power exercised under section 128 of the Customs Act. The power of amendment or correction, as the case may be, is vested on the same offer who had passed the initial order or an officer of equivalent rank. On the other hand, appellate jurisdiction is directed to correct decisions or orders passed by an inferior or lower authority. By its very nature an appellate authority is superior to the authority which had passed the order appealed against.

In the light of the above, we are of the view that petitioner has made out a case for issuance of a direction to the respondents for correction of the mistake or error in 21 of 22 www.taxguru.in23. os.wpl.249.20.doc classification of the goods from CTH '85176990' to '85176930' and thereby for amendment of the Bills of Entry. Refusal of the respondents to look into the aforesaid grievance of the respondents is therefore not justified.

Accordingly, we direct respondent No.2 to consider the prayer of the petitioner for amendment of the Bills of Entry Nos. 2434172, 2436049, 2522910, 2805152 and 2968920 (annexed as Annexure B colly to the writ petition) by exercising power under section 149 read with section 154 of the Customs Act and thereafter pass an appropriate order under section 17(4) of the Customs Act after giving due opportunity of hearing to the petitioner.

In the present case there is no dispute that excess duty was paid mistakenly on account of certain error and the said mistake was rectifiable under Section 154. Further, the appellant was not at fault at all but it was directed to file refund application at the first instance. Had the Department considered the appellant's request for amendment of its Bill of Entry then, perhaps, the alleged delay, etc. would not have arisen at all. The appellant had correctly and in line with the dictum of the Hon'ble Apex Court in the case of ITC Ltd. (Supra) requested for amendment and it was at the instance of the Department that a refund application was also filed. I find that the request for amendment/rectification sought for by the appellant was also as per the decision of Hon'ble jurisdictional High Court of Karnataka in the case of M/s DHL Express India Pvt. Ltd. Vs Commissioner of Service Tax-2021-TIOL-1830-HC-KAR-CUS has held as under:

"18. In the present case, as already stated earlier, the excess customs duty was paid mistakenly on account of certain error and the said mistake can be rectified under Section 154 as held by the Bombay High Court in case of KESHARI STEELS VS. COLLECTOR OF CUSTOMS reported in 2000 (115) ELT 320. The aforesaid judgment has been confirmed by the Hon'ble Supreme Court in an SLP reported in 2000 (121) ELT A 139."

In view of the above discussions, I am not convinced by the reasons attributed in the impugned order and hence, the same is set aside. The appellant's request for amendment/rectification being as per the Hon'ble Apex Court's judgment in ITC Limited (Supra), is therefore in order. The Adjudicating Authority is therefore directed to follow the directions of the Hon'ble Bombay High Court in the case of Dimension Data India (Supra) and proceed to pass appropriate order as per the specific directions contained at Paragraph 29 of the said judgment.

The appeal is allowed by way of remand on the above terms.

(Order pronounced in Open Court on 22/10/2021)