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2011 (1) TMI 876 - AT - CustomsSection 128 and 129 D(2) - There is no dispute that provisions in the Act pertaining to levy, collection, refund etc. apply to levy, collection, refund etc of cess levied under the APFPEC Act - As provisions relating to levy and collection are borrowed, the provisions relating to short levy, short payment, concomitant disputes and the remedies provided in Section 128 and 129 D(2) of the Act should also be held to have been borrowed for the purpose of APFPEC Act by virtue of the above sub-section - Therefore, reject the objection raised by M/s. Al Gyas Exports Pvt. Ltd. As regards the claim that a refund claim for excess duty paid can be validly made without challenging assessment under the act relying on the judgment of the Apex Court in the case of Karnataka Power Corporation Ltd. Vs. CC(Appeals) 2002 -TMI - 46268 - SUPREME COURT OF INDIA , note that a Larger Bench of the Tribunal had considered the ratio of the above decision and held that a refund claim was not maintainable unless the assessment order in pursuance of which duty paid was challenged and modified / set aside.
Issues Involved:
1. Refund claims for cess paid under the repealed Agricultural and Processed Food Products Export Cess Act, 1985 (APFPEC Act). 2. Applicability of the principles of unjust enrichment. 3. Validity of refund claims without challenging the assessment order. 4. Timeliness and procedural correctness of the review and appeal process. 5. Specific contractual obligations regarding the bearing of export duties and taxes. Analysis: 1. Refund Claims for Cess Paid Under the Repealed APFPEC Act: The appellants, exporters of rice, paid a cess of 0.5% ad valorem under the APFPEC Act on exports made in June 2006. The Act was repealed effective 1/6/2006. Refund claims filed by agents of the exporters were initially sanctioned by the original authority under Section 27 of the Customs Act, 1962. The Department challenged these orders, arguing the principles of unjust enrichment applied, as per the Supreme Court's judgment in Solar Pesticides Vs. UOI. 2. Applicability of the Principles of Unjust Enrichment: The Commissioner(Appeals) found that the cess amount was borne by the agents on behalf of the exporters, who reimbursed the agents and included the cess in the FOB value of the export goods. The Tribunal in Modipon Fibre Co. Vs. CCE, Ghaziabad, observed that prices are determined from various costs, including taxes and duties. The FOB price, as defined in "Incoterms, 2000," includes all costs to the seller until the goods pass the ship's rail. The Commissioner(Appeals) concluded that the realization of the full FOB value indicated that the incidence of cess had been passed on to the buyers, thus applying the principle of unjust enrichment. 3. Validity of Refund Claims Without Challenging the Assessment Order: The appellants argued that the cess was collected without authority of law and should be refunded. They cited various case laws, including Ahmed Khan & Sons Vs. CC, Calcutta, which held that cess collected without authority should be considered a deposit and refunded. However, the Tribunal referred to the Supreme Court's judgment in Priya Blue Industries, which held that a refund claim is not maintainable unless the assessment order is successfully challenged. The Tribunal upheld that exported goods are subject to assessment, and the refund claims must pass the test of unjust enrichment. 4. Timeliness and Procedural Correctness of the Review and Appeal Process: M/s. Al Gyas Exports Pvt. Ltd. argued that the provisions of the Customs Act relating to review and appeal were not applicable to the APFPEC Act and that the review order was barred by limitation. The Tribunal rejected this, noting that the relevant provisions of the Customs Act, including those relating to refunds and exemptions, applied to the cess under the APFPEC Act. The Tribunal also rejected the challenge regarding the timeliness of the review order, as the appellant participated in the proceedings without raising this objection earlier. 5. Specific Contractual Obligations Regarding the Bearing of Export Duties and Taxes: The appellants claimed that their contracts with foreign buyers specified that export duties and taxes were to be borne by the seller, implying that the burden of the cess was not passed on to the buyers. The Commissioner(Appeals) found that the contracts submitted were dated prior to the repeal of the APFPEC Act. The Tribunal noted that the definition of FOB value does not conclusively prove that the cess was included in the FOB value, especially where contracts specified that export duties and taxes were to be borne by the seller. However, the Tribunal upheld the finding that the realization of the full FOB value indicated the incidence of cess had been passed on to the buyers. Conclusion: The Tribunal rejected all the appeals, upholding the Commissioner(Appeals)'s decision that the refund claims were hit by the principle of unjust enrichment and that the appellants failed to establish that the cess burden was not passed on to the buyers. The Tribunal also upheld the procedural correctness of the review and appeal process and the applicability of the Customs Act provisions to the cess under the APFPEC Act.
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