2014 (11) TMI 492 - AT - Customs

Denial of refund claim - Final assessment of bill of entry already done - whether the refund claim can be entertained when the person asking for refund has not challenged the assessments made finally on the bills of entry - Held that - before issue of Circular dated 06.11.1997, another Circular dated 22.1.1985 was existing. Para -2 of the circular dated 06.11.1997 highlights the lapses pointed out by the CAG s audit regarding assessments made with respect to such conversions of vessels from foreign run to costal run. As a modification to the exisitng Circular an alternative method of duty payment on the ship s stores etc., required to be consumed during the costal run, was extended to the importers. However, assessment with respect to duty paid on estimated quantity of ship stores consumed in costal run was also required to be made provisionally. In the light of prescribed procedure respondent was required to keep on record the fact that vessel after running on coastal run for some time will again taken out for foreign run and that appellant will be seeking refund claim of the excess duty paid. In the absence of compliance with the prescribed procedure, it cannot be said that duty assessments made on the bill of entry were provisional. Findings recorded by the first appellate authority to that extent are not legally correct. Once it is held that assessments made by the Revenue on the bills of entry were final then the judgments relied upon by the learned AR become relevant. refund claim contrary to the assessment orders is not maintainable without that order of assessment being modified in appeal - Following decision of Priya Blue Industries Limited 2004 (9) TMI 105 - SUPREME COURT OF INDIA - Decided in favour of Revenue.

Summary

Issues:
1. Admissibility of refund claim when bill of entry was finally assessed.
2. Provisional assessment requirement as per CBEC Circular No. 58/97 dated 06.11.1997.

Issue 1: Admissibility of refund claim when bill of entry was finally assessed:
The appeal was filed by the Revenue against the Order-in-Appeal (OIA) on the ground that the bill of entry was filed by the Respondent at the time of vessel conversion, and duty was paid without challenging the assessment. The Revenue argued that as per various case laws, including CC vs. Eurotex Indus & Export Limited, refund was not admissible if assessments on bills of entry were not challenged. The Revenue contended that the respondent did not request provisional assessment as required by CBEC Circular No. 58/97 dated 06.11.1997, and hence, the refund claim was not valid. The first appellate authority considered the duty payment as provisional, but the Tribunal found this interpretation incorrect based on the Circular's provisions. The Tribunal cited the case of Priya Blue Industries Limited, where it was held that refund claims contrary to assessment orders are not maintainable without modification in appeal.

Issue 2: Provisional assessment requirement as per CBEC Circular No. 58/97 dated 06.11.1997:
The Circular highlighted the need for provisional assessment during vessel conversion from foreign run to coastal run. It allowed steamer agents to pay duty on estimated quantity of ship stores consumed during the coastal run. The Circular mandated filing of Bill of Entry at the time of conversion, with duty to be collected within 7 days. The Circular also outlined the procedure for refund claims upon reconversion. The Tribunal noted that the respondent failed to follow the Circular's prescribed procedure, leading to the conclusion that the assessments made were not provisional. Consequently, the Tribunal set aside the first appellate authority's order, allowing the Revenue's appeal and rejecting the respondent's cross-objection.

This detailed analysis of the judgment addresses the issues of admissibility of refund claims and the provisional assessment requirement as per the CBEC Circular, providing a comprehensive understanding of the legal reasoning and decisions involved in the case.