2012 (11) TMI 919 - HC - Customs

Denial of refund on the ground of non-filing of appeal - export of rice to foreign buyer - amount of duty/cess was paid - cess was paid under protest - shipping bills were accepted and there was no assessment order Held that - if the assessment order itself enables refund, the law does not expect nor it would be logical to hold - the person to file appeal - that it would be inferred an empty formality. In the case of self-assessment if the declaration made by the person liable to duty is accepted and such return also mentions about the refund of duty to be made, there would not be any necessity to file appeal before the departmental appellate authority or the statutory Tribunal. A feeble submission is sought to be made by the Revenue that the shipping bill itself is an assessment order. The same cannot be accepted. Section 2(2) of the Act defines assessment as to include provisional assessment, reassessment or any order of assessment in which duty assessed is nil . In these cases the department has not placed before us any assessment order. Therefore we cannot countenance the submission. We hold that the appellants cannot be denied refund on the ground that they have not availed the remedy of appeal and further appeal to CESTAT New Ground before the Tribunal - held that - Tribunal did err in refusing to hear the appellant only on the ground that the ground had not been raised earlier. Rule 10 was sufficiently widely framed to allow the Tribunal to do so. Having regard to the fact that the Tribunal was itself considering the issue on a contested (sic connected) hearing there was no reason why the appellant should have been shut out from pleading its case on the same basis. - CESTAT was not precluded from hearing and considering a new ground which related to the subject matter of the dispute before them. The question whether a refund claim under Section 27 of the Act would lie when the assessee did not file appeal against the speaking/assessment order is certainly a question relating to subject matter of the suit and therefore the CESTAT cannot be denied jurisdiction to consider the question raised by the Revenue during the course of the arguments. Unjust enrichment - held that - There is no dispute that they are the official rules of International Chamber of Commerce of trade terms intended to facilitate conduct of international trade and are binding on all those who are engaged in International trade. After perusing these as well as the shipping bills we are convinced that FOB value (invoice) does not and could not have included the cess paid by the appellants and that the appellants did not pass on incidence of duty to the buyer. In the absence of any such material, the equitable principle of unjust enrichment does not bar refund claims under Section 27 of the Act. - Decided in favor of assessee.

Summary

Issues Involved:
1. Bar of refund claims by unjust enrichment.
2. Consequences of not filing appeals against the speaking/assessment orders.

Issue-Wise Detailed Analysis:

Bar of Refund Claims by Unjust Enrichment:
1. Application for Refund: Under Section 27 of the Customs Act, 1962, a person can claim a refund of any duty paid by them in pursuance of an assessment or borne by them. This application must be supported by documentary evidence to establish that the duty was paid by the person and not passed on to another party.
2. Section 28D Presumption: Section 28D of the Act presumes that the person who paid the duty has passed on the incidence of duty to the buyer unless proven otherwise. This rebuttable presumption is crucial in determining unjust enrichment.
3. CESTAT Findings: The CESTAT found that the FOB value recovered did not include the impugned cess, and the appellants did not pass on the duty incidence to the buyers. This finding was based on the contracts and shipping bills provided by the appellants.
4. Incoterms and Sale Contracts: The appellants relied on Incoterms 2000 and specific sale contracts which stated that export duties and taxes were to be borne by the seller. This supported their claim that the cess was not included in the FOB value.
5. Interpretation of Contracts: The court examined the sale contracts and Incoterms and concluded that the FOB value did not include the cess, thus rebutting the presumption under Section 28D. Therefore, the principle of unjust enrichment did not bar the refund claims.

Consequences of Not Filing Appeals Against the Speaking/Assessment Orders:
1. CESTAT Jurisdiction: The CESTAT has wide powers to hear and consider new grounds related to the subject matter of the dispute. The Tribunal can decide on issues even if they were not raised in the initial appeal, provided they relate to the subject matter.
2. Necessity of Appeals: The court discussed whether it was necessary to file an appeal against a speaking order that was in favor of the appellants. It was concluded that if the speaking order itself allows the refund, there is no need to file an appeal.
3. Flock India and Priya Blue Precedents: The Supreme Court in Flock India and Priya Blue held that if an assessment order is not challenged and becomes final, a refund claim cannot be maintained. However, if the assessment order itself enables a refund, filing an appeal is unnecessary.
4. Assessment Orders: In these cases, the speaking orders passed by the Assistant Commissioner on 30-10-2006 were in favor of the appellants, allowing the refund claims. Therefore, the appellants were not required to file appeals against these orders.
5. Shipping Bills as Assessment Orders: The court rejected the argument that shipping bills themselves constitute assessment orders. The department did not provide any specific assessment orders, and thus the appellants' refund claims were valid without the need for appeals.

Conclusion:
The appeals were allowed, setting aside the orders of the CESTAT and the orders-in-appeal. The court held that the principle of unjust enrichment did not bar the refund claims and that the appellants were not required to file appeals against the speaking orders that were in their favor.