2014 (3) TMI 245 - AT - Customs

Denial of refund claim - Maintainability of refund claim u/s 27 - parts of power driven pumps utilized by the factory within the factory premises - Held that - Undisputedly there was no lis between the respondent and the Revenue at the time of payment of duty and this will not deprive the respondent of his right to file refund claim based on a subsequent clarificatory Notification. Hence the question of filing appeal against the order of assessment does not arise - both power driven pumps as well as parts of power driven pumps used for manufacturing pumps within the factory were exempted from payment of excise duty. We are also satisfied that notifications were rescinded and consolidated notification was issued on March 1, 1994 with a view to reduce number of notifications. No demand hence could have been made against the appellant in respect of parts of power driven pumps by issuing show cause notices. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not be said that while issuing notification No. 46/94 of March, 1, 1994, the exemption in respect of said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained as it was and in view of demand being made by the Department, a representation was made by the industries and on being satisfied, the Central Government issued a clarificatory notification No. 95/94 on April, 25, 1994. It was not a new notification granting exemption for the first in respect of parts of power driven pumps to be used in the factory for manufacture of pumps but clarified the position and made the position explicit which was implicit - Following decision of PRIYA BLUE INDUSTRIES LTD. Versus COMMISSIONER OF CUSTOMS (PREVENTIVE) 2004 (9) TMI 105 - SUPREME COURT OF INDIA - Decided against Revenue.

Issues Involved:

1. Non-filing of appeal against the assessment order.
2. Entitlement to refund based on a subsequent clarificatory notification.
3. Consistency of government policy regarding exemption from Additional Duty of Customs (SAD) on barges.
4. Applicability and retrospective effect of clarificatory notifications.

Detailed Analysis:

1. Non-filing of Appeal Against the Assessment Order:

The Revenue argued that the respondent paid the duty as per their assessed Bill of Entry and did not challenge the assessment. Referencing the Supreme Court decision in *Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive)*, the Revenue contended that the respondent was not entitled to a refund because they did not appeal the assessment. However, the respondent countered that there was no assessment order at the time of duty payment, which did not deprive them of the right to file a refund claim based on a subsequent clarificatory notification. The Tribunal referenced the Delhi High Court decision in *Aman Medical Products Ltd. v. Commissioner*, which clarified that duty paid without an assessment order could still be refunded under Section 27 of the Customs Act, 1962. The Tribunal concluded that since there was no dispute at the time of duty payment, the respondent was not required to file an appeal against the assessment to claim a refund.

2. Entitlement to Refund Based on a Subsequent Clarificatory Notification:

The respondent claimed a refund based on Notification No. 32/2011-Cus., dated 24-3-2011, which amended Notification No. 20/2006-Cus., exempting barges from the payment of Additional Duty of Customs (SAD). The Tribunal found that the subsequent notification was clarificatory, aimed at rectifying an inadvertent error due to the omission of interdependent clauses in Notification No. 20/2006. The Tribunal agreed with the respondent that the amendment was intended to restore the long-standing policy of exempting barges from SAD, which had only appeared leviable due to a technical lapse.

3. Consistency of Government Policy Regarding Exemption from SAD on Barges:

The respondent argued that the principal Notification No. 20/2006 had consistently exempted barges from SAD since 2006, and there was no change in the government's policy. The imposition of CVD in 2011 inadvertently led to the levy of SAD on barges, which was not the government's intention. The Tribunal accepted this argument, noting that the government's policy was to exempt barges from SAD, and the clarification in Notification No. 32/2011 was to rectify the unintentional levy of SAD during the 23-day period.

4. Applicability and Retrospective Effect of Clarificatory Notifications:

The Tribunal referred to the Supreme Court decision in *W.P.I.L. Ltd. v. Commissioner of Central Excise*, which held that clarificatory notifications take effect retrospectively, clarifying the position and making explicit what was implicit. The Tribunal found that the ratio of this decision applied to the present case, supporting the respondent's claim for a refund based on the clarificatory nature of Notification No. 32/2011.

Conclusion:

The Tribunal upheld the learned Commissioner (Appeals) order, finding no infirmity in it. The appeal filed by the department was dismissed as devoid of merits, affirming the respondent's entitlement to a refund based on the subsequent clarificatory notification and consistent government policy exempting barges from SAD. The Tribunal pronounced this decision in open court.

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