2016 (3) TMI 939 - HC - Customs

Refusal of refund of duty paid under protest - Duty demanded for cost recovery charges - No challenge to the adjudication by the competent authorities of the amounts - Held that - there was no statutory Appeal filed from the demand for bonding costs claimed by the competent authority upon assessment. So, as no Appeal has been preferred against such adjudication, the question of filing an application for refund of the amount would not arise at all. Therefore, the Tribunal was justified to come to the conclusion that the claim of refund could not be entertained as there was no challenge to the adjudication of the amounts by the competent authorities. - Decided against the appellant

Issues Involved:
1. Maintainability of refund claim for cost recovery charges.
2. Requirement of adjudication before issuing a notice of demand.
3. Necessity of challenging the demand through statutory appeal.
4. Legal implications of not challenging an assessment order.

Issue-wise Detailed Analysis:

1. Maintainability of Refund Claim for Cost Recovery Charges
The core issue was whether the claim for refund of cost recovery charges was maintainable without the appellant having appealed against the demand. The Tribunal held that the refund claim was not maintainable due to the appellant's failure to appeal the demand. The appellant argued that no adjudication was made regarding their liability to pay the charges before the notice of demand was issued. The court upheld the Tribunal's decision, emphasizing that the refund claim could not be entertained without a challenge to the adjudication of the amounts by the competent authorities.

2. Requirement of Adjudication Before Issuing a Notice of Demand
The appellant contended that there was no adjudication by the authorities regarding the amounts payable, thus making it unnecessary to appeal the demand. The court noted that a demand was indeed raised by the Assistant Commissioner for the payment of cost recovery charges. The court referred to Section 128 of the Customs Act, which allows for appeals against decisions or orders passed under the Act. The court concluded that the demand was made after an adjudication, and the appellant should have challenged it through a statutory appeal.

3. Necessity of Challenging the Demand Through Statutory Appeal
The court emphasized that any decision or order passed under the Customs Act can be challenged by filing an appeal before the Commissioner of Appeals. The court cited the Supreme Court's judgment in Collector of Central Excise, Kanpur vs. Flock (India) Pvt. Ltd., which stated that if an adjudicating authority's order is appealable and the aggrieved party does not file an appeal, the correctness of the order cannot be questioned subsequently by filing a claim for refund. This principle was reiterated in the case of Karan Associates vs. Commissioner of Customs (import) Mumbai, where the court held that the assessment order stands unless set aside by an appeal, and thus, the refund claim was not maintainable.

4. Legal Implications of Not Challenging an Assessment Order
The court held that the appellant's failure to appeal the demand for bonding costs meant that the order remained in operation. The court referenced the Division Bench judgment in Karan Associates, which stated that the absence of a speaking order does not invalidate the assessment order and does not entitle the importer to claim a refund. The court concluded that the Tribunal was justified in rejecting the refund claim as there was no challenge to the adjudication of the amounts by the competent authorities.

Conclusion
The court answered the substantial question of law by affirming that the Appellate Tribunal was correct in holding that the refund claim was not maintainable due to the appellant's failure to appeal the demand. Consequently, the appeal was rejected.

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