2008 (7) TMI 204 - AT - Customs

Amount collected without extending/considering benefit of unconditional exemption notification 20/2006 duty paid at higher rate erroneously held that it was incumbent on part of assessing officer to take into account said notification, which he omitted it is a case of sheer omission on part of AO - refund cannot be denied on ground of non-challenge to assessment order appeal of assessee is allowed

Summary

Issues Involved:
- Incorrect assessment of Additional Duty on imported goods
- Refund claim rejected by Revenue
- Applicability of exemption notification
- Duty of assessing officer in determining correct duty
- Obligation of Department to extend relief under unconditional exemption notification

Detailed Analysis:

Issue 1: Incorrect assessment of Additional Duty on imported goods
The appellants imported Standard Newsprint Paper and paid duty levied by the proper officer at 4% Additional Duty under the Customs Tariff Act, 1975. Subsequently, they discovered that the goods attracted a 'Nil' rate of Additional Duty as per Notification No. 20/2006-Cus. dated 1-3-2006. The appellants filed a refund claim, which was rejected by the Revenue based on the decision in Priya Blue Industries Ltd. v. CC (Preventive). The Original Authority and Commissioner (Appeals) upheld the rejection, leading the appellants to appeal to the Tribunal.

Issue 2: Refund claim rejected by Revenue
The Revenue issued a Show Cause Notice proposing rejection of the refund claim, arguing that the appellants had accepted the initial assessment without challenge. The appellants contended that filing a refund claim constituted challenging the assessment. They also argued that it was the duty of the proper officer to determine the correct duty, and the failure to consider the relevant notification allowed for re-assessment and refund claim.

Issue 3: Applicability of exemption notification
The appellants relied on the Apex Court's decision in Karnataka Power Corporation Ltd. v. CC (Appeals), Chennai and various CESTAT decisions. They argued that the assessing officer's failure to apply the 'Nil' duty notification constituted improper assessment, not a disputed assessment warranting an appeal. They emphasized that the assessing officer's negligence led to the overpayment of duty, entitling them to a refund.

Issue 4: Duty of assessing officer in determining correct duty
The Tribunal noted that assessment of Customs Duty is a technical task involving classification, valuation, and applying the correct duty rate, considering exemption notifications. The assessing officer failed to consider the unconditional exemption notification, resulting in the erroneous assessment and overpayment by the appellants.

Issue 5: Obligation of Department to extend relief under unconditional exemption notification
Citing precedents, including Shree Hari Chemicals v. UOI, the Tribunal held that the Department must honor unconditional exemption notifications, even if the importer fails to claim the relief explicitly. The Tribunal differentiated the present case from previous decisions and ruled that the assessing officer's omission could be corrected under Section 154 of the Customs Act, entitling the appellant to a refund.

In conclusion, the Tribunal allowed the appeal, emphasizing that the appellants were rightfully entitled to a refund due to the assessing officer's negligence in applying the correct duty rate as per the unconditional exemption notification, preventing a miscarriage of justice.