M/s S.K.Timber And Company vs Commr. Of Customs (Port), Kolkata

The instant appeal has been preferred by the appellant assessee against demand of Customs duty of Rs.3,05,915/- alongwith applicable interest and

equivalent penalty under Section 114A of the Customs Act, 1962, as confirmed by the Ld. Dy. Commissioner, Appraising Refund Section, Kolkata

vide Order-in-Original dated 17.4.2018 which has been further upheld by the Ld. Commissioner (Appeals) vide Order-in-Appeal dated 10.10.2018

which is impugned herein.

Briefly stated, the facts of the case are that the appellant assessee applied for refund of 4% SAD in terms of Notf. No. 102/2007- Cus dated

14.9.2007 against goods imported vide 2 nos. Bill of Entries on which applicable sales tax / VAT is paid while making sales domestically. The said

refund claim came to be allowed by the Proper Officer vide Order dated 26.09.2014 and the refund amount was duly sanctioned. Thereafter, a Show

Cause Notice dated 05.03.2018 was issued to recover the aforesaid refund amount on the ground that the CA certificate submitted by the assessee

was not proper. The said SCN was adjudicated ex-parte vide Order-in-Original dated 17.4.2018 whereby the duty demand proposed in the SCN was

confirmed alongwith interest and penalty on the ground that the CA certificate was not issued by the statutory auditor who certified the annual

accounts of the assessee and that the certificate was actually issued by the firm whose existence was questionable and hence, the said certificate was

not proper. Accordingly, it was held that refund was wrongly sanctioned on the basis of forged documents.

At the stage of first appeal filed by the appellant assessee, the assessee submitted another certificate duly signed by their Statutory Auditors who is

certifying their annual financial accounts. They submitted that since they did not receive the SCN, they could not get the opportunity to furnish reply in

defence to justify their claim of refund. The Ld. Commissioner (Appeals) vide impugned Order dated 10.10.2018, however, rejected the appeal on the

ground of fraud without taking cognizance to the submission of fresh CA certificate by the Statutory Auditor and accordingly upheld the original order

confirming the demand.

Sri B. Singh, Consultant appeared for the Appellant and Sri A. K. Singh, A/R, appeared for the Revenue.

The Ld. Consultant for the Appellant at the outset submitted that they have obtained a fresh certificate from their Statutory Auditor which has not

been considered by the Commissioner (Appeals) and that the previous certificate submitted by their employee for whose mistake, the appellant should

not be penalised. He relied upon certain decisions to submit that the assessee should not be penalised for mistake on the part of the employee. He

submitted that there is no case of fraud inasmuch as they have duly paid VAT while making sale of imported goods and that they are legally entitled

for SAD refund paid at the time of import.

He also submitted that since the SCN was not served to them, the assessee could not represent its case before the original authority. He further

submitted that in any case, the Department was required to review the original order dated 26.09.2014 by virtue of which refund was sanctioned and

an appeal should have been filed against the said order. He relied on decisions of the Tribunal in the case of Doothat Tea Estate Kanoi Planation (P)

Ltd vs. CCE 2001 (135) ELT 386 (Tri). He accordingly submitted since no appeal has been preferred, the proceedings initiated vide the impugned

SCN is not legally sustainable.

The appellant also submitted a Misc. Application for seeking modification of Appeal Memo, in the column pertaining to “Relief claimed in appealâ€,

in serial no. 24(2) to further pray for seeking decision on merits of the case and upholding of the order dated 26.9.2014 sanctioning refund, since not

challenged by the Department.

The Ld. A.R. for the Revenue reiterated the findings made by the Commissioner (Appeals) in the impugned order and prayed that the appeal be

rejected being devoid of any merit.

Heard both sides through video conferencing and perused the appeal records in detail.

I note that refund of 4% SAD that has been sanctioned to the appellant vide order dated 26.9.2014 has not been reviewed or challenged and the

said fact is not in dispute. Neither the said fact has been disputed by the Ld. AR appearing for the Revenue. SCN dated 05.03.2018 has been issued

under Section 28 of the Customs Act to recover the amount refunded vide earlier Order dated 26.9.2014 with the presumption that the refund was

erroneously granted to the assessee. Whether or not refund has been erroneously granted would have to be decided in the manner provided in law.

Section 128 of the said Act provides liberty to ‘Any Person’ aggrieved by the decision or order to prefer an appeal before the Commissioner

(Appeals), which has not been done in the facts of the present case.

In this regard, the law has been settled by the Apex Court in the case of ITC Ltd vs. CCE, Kolkata 2019 (368) ELT 216 (SC) wherein it has been

inter-alia held that “The expression ‘Any person’ is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal

aggrieved by an order of assessment. It is not only the order of reassessment which is appealable but the provisions of Section 128 make

appealable any decision or order under the Act including that of self-- assessmentâ€​.

In view of the aforesaid legal position, neither the assessee can seek refund nor Revenue can proceed to recover the refund already sanctioned

without challenging the earlier order by way of remedy provided in Section 128 of the Act. Having not challenged the previous order, the Revenue

cannot be allowed to re-open the issue. Without going into any other issue raised by both sides, I set aside the impugned order. Consequently, the

demand of duty, interest and penalty imposed in the original order is quashed.

The Appeal is allowed with consequential relief as per law. Misc. Application filed by the appellant also stands disposed.

(Pronounced in the open court on 31 May, 2021)