2010 (6) TMI 369 - AT - Customs

Refund limitation Relevant date - contention of the department is that limitation for the purpose of fling refund claim starts from the provisional assessments finalized Lower authorities gone on assumption that date of finalization of bill of entry to be relevant for limitaion - Held that - matter remanded to the original adjudicating authority to decide the date of finalization of assessment, the date of adjustment and the date on which refund claim should have been filed and the date on which the same has been filed and thereafter decide the eligibility

Summary

Issues:
1. Rejection of refund claims on grounds of limitation and unjust enrichment.
2. Determination of relevant date for filing refund claim.
3. Consideration of government undertaking's eligibility for extended time limit.
4. Examination of unjust enrichment regarding duty incidence.

Analysis:

Issue 1: Rejection of Refund Claims
The case involved the rejection of refund claims amounting to Rs. 35,808/- and Rs. 8,36,741/- for two vessels by the Shipping Corporation of India Ltd. The primary reasons for rejection were the claims being filed beyond the six-month time limit from the date of finalization of provisional assessment and the concept of unjust enrichment. The appellants argued that the date of receipt of the triplicate copy of the bill of entry by their agents should be considered as the finalization date, not the dates provided by the department. The Tribunal highlighted the importance of the date of adjustment of duty after final assessment, as per the Customs Act, 1962. It emphasized the necessity of a written communication from the department regarding the finalization of provisional assessment for the importer to claim a refund or pay differential duty. The Tribunal found merit in the appellants' argument, stating that the department must establish the date of final adjustment if rejecting a refund claim based on limitation. The case was remanded for a detailed examination of the relevant dates and communication regarding finalization of assessment.

Issue 2: Determination of Relevant Date
The central issue revolved around determining the relevant date for filing a refund claim. The Tribunal highlighted the distinction between the date of final assessment and the date of adjustment of duty after final assessment, as specified under Sections 27 and 28 of the Customs Act, 1962. It emphasized the necessity of written communication or the return of the bill of entry to inform the importer of the finalization of assessment and duty adjustment. The Tribunal found that the lower authorities had erred in considering the date of finalization of the bill of entry as the relevant date for limitation purposes, emphasizing the need for a clear establishment of the final adjustment date.

Issue 3: Eligibility of Government Undertaking
The appellants also made an alternative claim, asserting that as a government undertaking, they should be granted a one-year time limit for filing refund claims. However, the Tribunal clarified that a government undertaking with public shareholding, where the government holds the majority shares, cannot be considered as a government entity. Therefore, the claim for an extended time limit based on government status was deemed unsustainable.

Issue 4: Unjust Enrichment
Regarding unjust enrichment, the Commissioner (Appeals) had concluded that the duty incidence had been passed on based on the duty being expensed out in a previous year. However, the appellants argued that they followed the cash method of accounting, not the accrual method, and therefore, the duty payment was shown as an expenditure. The Tribunal agreed with the appellants, stating that following the cash method should not disqualify a profit-making company from being eligible for a refund. The case was remanded for a fresh consideration of the unjust enrichment issue by the Commissioner (Appeals) in line with the Tribunal's observations.

In conclusion, the Tribunal remanded the matter for a detailed examination of the relevant dates for filing refund claims, clarified the distinction between final assessment and duty adjustment dates, rejected the claim for extended time limit based on government status, and called for a reassessment of the unjust enrichment aspect.