2014 (10) TMI 506 - AT - Customs

Denial of refund claim - Overvaluation of goods - Voluntary payment of duty - Held that - Once the payment is made under protest, it means assessment also has been challenged. In such cases, either an assessment order confirming the original assessment has to be issued or the refund claim has to be considered. In any case, the appellant has the option to file an appeal against the assessment also in case the refund was rejected. In this case, the respondent did not have any grievance since the refund was sanctioned by the original authority as agreed upon between the two parties as emerging from the letter written by the party. No doubt there is no estoppel in law. At the same time, the officers of customs are also required to follow the law and the refusal to collect correct rate of duty compelling the assessee to pay higher duty itself was wrong. The correct procedure would have been to resort to provisional assessment in which case, the appellant would not have paid higher duty at all. The facts and circumstances show that the refund sanctioned by the original authority was in accordance with law and there was no need to interfere with the same by filing an appeal. Fortunately, the Commissioner (Appeals) has agreed with the lower authority in this case - No merit in the appeal filed by the Revenue - Decided against Revenue.

Issues:

1. Incorrect duty payment by the appellant.
2. Payment under protest and refund claim rejection.
3. Applicability of provisional assessment.
4. Commissioner (Appeals) decision validation.

Issue 1: Incorrect duty payment by the appellant

The case involved the appellant being asked to pay duty at a higher rate than the correct rate applicable for the export of Iron Ore Fines to China. Despite the authorization stating the duty was voluntarily paid, it was revealed during the hearing that the appellant paid the higher duty to ensure the consignment leaves India as per the Assistant Commissioner's directions. The Tribunal noted that the assessment had to be considered provisional due to the circumstances, even though not explicitly stated, and rejected the Revenue's argument that a refund claim could not be filed without challenging the assessment.

Issue 2: Payment under protest and refund claim rejection

The Tribunal highlighted the peculiar nature of the case where the appellant was compelled to pay higher duty by Customs, leading them to pay under protest with the expectation of a refund. The absence of a prescribed procedure for payment under protest in Customs law was noted. The Tribunal deemed the letter by the appellant as a form of protest, indicating a challenge to the assessment. It was emphasized that once payment is made under protest, the assessment is effectively challenged, giving the appellant the right to file an appeal against the assessment if the refund claim was rejected.

Issue 3: Applicability of provisional assessment

The Tribunal stressed the importance of following correct procedures, suggesting that resorting to provisional assessment would have prevented the appellant from paying higher duty. It was observed that the refund sanctioned by the original authority was in line with the law, and there was no justification to interfere with it by filing an appeal. The Commissioner (Appeals) concurred with the lower authority's decision, reinforcing the validity of the refund and rejecting the Revenue's appeal.

Issue 4: Commissioner (Appeals) decision validation

The Tribunal concluded that there was no merit in the Revenue's appeal and rejected it, along with disposing of the cross-objections filed by the respondents. The decision of the Commissioner (Appeals) was upheld, emphasizing the correctness of the refund sanctioned by the original authority and the lack of necessity for further intervention through an appeal process.

(Order dictated and pronounced in open Court)

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