2010 (5) TMI 473 - AT - Customs

Refund - limitation duty paid under protest provisional assessment - finalisation of provisional assessment was made - MODVAT credit of the CVD part of the duty paid by them was availed by the assessee - no appeal was filed by the assessee Held that - the assessee chose to take the benefit of the finalised assessment by availing MODVAT credit of CVD - assessee is estopped from contending that the refund claim should be considered as a challenge to the assessment order - appeal is dismissed

Issues Involved:
1. Compliance with conditions of Customs Notification 23/98.
2. Validity of Essentiality Certificates issued by MOEF.
3. Finalization of provisional assessment and subsequent refund claim.
4. Applicability of legal precedents regarding unchallenged assessments and refund claims.

Detailed Analysis:

Issue 1: Compliance with Conditions of Customs Notification 23/98

The appellant imported goods declared as "second-hand refurbished motor winding line with standard parts and accessories" under the benefit of Customs Notification 23/98 (Sr. No. 138). This notification allowed a 'nil' rate of duty for goods required for setting up new capacity with non-ODS technology, subject to two conditions:
1. Approval by the Steering Committee in the Ministry of Environment and Forests (MOEF).
2. Submission of a list of goods required for the project accompanied by a certificate from an officer not below the rank of a Deputy Secretary in MOEF.

The appellant fulfilled the first condition but failed to meet the second condition initially, as the required certificate was obtained only after the provisional release of the goods.

Issue 2: Validity of Essentiality Certificates Issued by MOEF

The first Essentiality Certificate issued by MOEF on 29-1-1999 did not describe the goods as "second-hand refurbished motor winding line" as declared in the bill of entry. The appellant sought a fresh certificate specifying the goods as "second-hand refurbished motor winding line," but the new certificate dated 2-9-1999 described the goods in the same manner as the first certificate. This discrepancy led the assessing authority to reject the certificate for not covering the imported goods.

Issue 3: Finalization of Provisional Assessment and Subsequent Refund Claim

The provisional assessment was finalized on 12-7-1999, and the appellant paid the duty of Rs. 1.63 crores on 19-7-1999. Subsequently, the appellant filed a refund claim for Rs. 1,15,19,138/- on 16-1-2000, claiming compliance with the Notification's conditions. The department issued a show-cause notice proposing to reject the refund claim on three grounds:
1. Late application for the Essentiality Certificate.
2. The original certificate did not cover second-hand/refurbished goods.
3. The additional certificate did not cover the subject goods.

The Deputy Commissioner of Customs rejected the refund claim on the merits, stating that the certificate did not satisfy the Notification's condition. This decision was upheld by the Commissioner (Appeals).

Issue 4: Applicability of Legal Precedents Regarding Unchallenged Assessments and Refund Claims

The appellant argued that their letter dated 27-5-1999 to the Assistant Commissioner of Customs, which reserved their right to file a refund claim, should be deemed as a payment under protest. They cited cases like CCE, Kanpur v. Flock (India) Pvt. Ltd. and Priya Blue Industries Ltd. v. CC, arguing that these decisions were not applicable as there was no lis between the appellant and the department.

The department, supported by the learned JCDR, countered that the appellant accepted the final assessment by availing MODVAT credit of the CVD part of the duty and did not appeal against the final assessment. They cited the Supreme Court's rulings in Mafatlal Industries Ltd. v. UOI, Flock (India) Pvt. Ltd., and Priya Blue Industries, which established that a refund claim is not maintainable unless the assessment order is successfully challenged.

The Tribunal, considering these arguments, upheld the lower authorities' decision, stating that the appellant's acceptance of the final assessment and availing of MODVAT credit estopped them from challenging the assessment through a refund claim.

Conclusion:

The Tribunal dismissed the appeal, sustaining the impugned order, and concluded that the appellant was not entitled to the refund claim without successfully challenging the final assessment in accordance with the law. This decision was pronounced in court.

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