2015 (11) TMI 890 - AT - Customs

Refund of supervision charges - The appellant paid the said supervision charges. However, on realizing that such ships are exempted by virtue of Notification No. 43/97, they applied for refund of the supervision charges. - Held that - It is an admitted position that supervision charges are not required to be paid, however, the refund has been rejected solely on the ground that the appellants had asked for the supervision and the same was provided, therefore, refund cannot be granted. We find that the supervision charges are statutory in nature and prescribed by law. Being statutory charges, it cannot be collected if it is not due. It is not like an ordinary services where as a liability arise as the result of availment of service. Furthermore, this ground was not a ground for which the original adjudicating authority had rejected the refund. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Applicability of Customs Act provisions to supervision charges.
2. Exemption under Notification No. 43/97 for vessels carrying coastal goods.
3. Claim of refund for supervision charges on foreign vessels.

Analysis:
1. The appellant, a manufacturer of HB Sponge Iron, imported iron ore pellets/lumps and also procured goods indigenously using ships for transportation, requiring Customs supervision during unloading under Sections 92, 93, 94, 97, and 98(1) of the Customs Act. However, vessels exclusively carrying coastal goods were exempted from these provisions by Notification No. 43/97, eliminating the need for supervision charges. The appellant utilized foreign vessels for coastal transportation, initially paying supervision charges but later seeking a refund based on the exemption. The original adjudicating authority denied the refund citing a circular that excluded vessels converting between foreign and coastal runs from the exemption.

2. The appellant appealed to the Commissioner (Appeals), who acknowledged that supervision charges were not required for coastal goods under Section 36 of the Customs Act. However, the Commissioner emphasized that since the appellant requested supervision for unloading coastal goods, they were liable to pay overtime charges as per prescribed rates. The Commissioner highlighted the importance of following Customs instructions and suggested addressing any implementation difficulties with the Board. The Commissioner upheld the demand for supervision charges based on the appellant's request for supervision, not the original grounds cited by the adjudicating authority.

3. Upon review, the Appellate Tribunal found that while supervision charges were statutory, they were not payable if not due, contrary to ordinary services where liability arises from service utilization. The Tribunal noted that the denial of the refund solely based on the appellant's request for supervision, without considering the original grounds for rejection, was unjust. Consequently, the Tribunal set aside the previous order, allowing the appeal and granting consequential benefits to the appellant. The judgment emphasized the statutory nature of charges and the necessity for adherence to legal provisions in determining refund eligibility.

This detailed analysis of the judgment highlights the issues surrounding Customs Act provisions, exemptions under Notification No. 43/97, and the claim for refund of supervision charges on foreign vessels, culminating in the Appellate Tribunal's decision to overturn the previous ruling in favor of the appellant.