2016 (6) TMI 148 - AT - Customs

Refund claim - Department reduced the amount of refund to the extent the amount was paid utiliziing the Cenvat credit representing DEPB and not in cash - Held that - Once such proposition is accepted there arises a refund of ₹ 1,66,990/- which was paid in cash as part of ₹ 6,27,213/- earlier paid towards duty liability. At this juncture, appellant says that there is no formula in the Customs law to reduce the refund by any proportion, adjusting duty liability arbitrarily, a part form DEPB scrips and part from cash. He is correct in his statement for the reason that there is no law in that regard. Therefore, appellant is entitled to refund of ₹ 1,66,990/-. If there is any interest payable that shall also be taken care by the Adjudicating Authority. - Matter remanded back

Summary

Issues:
1. Discrepancy in the declared value leading to enhanced duty liability determination.
2. Dispute over the refund amount after the re-adjudication process.

Analysis:
1. The appellant contended that the duty was payable based on the declared value of ?90,31,865, but Customs increased it to ?96,59,079 without valid reason. The duty liability was discharged using DEPB scrips and cash. The appellate authority remanded the matter for a speaking order to resolve the dispute.

2. Following the remand, the Adjudicating Authority accepted the declared value, and the duty liability was determined at ?90,31,865, which was discharged using DEPB scrips. The appellant claimed a refund of ?6,27,213 paid in cash. However, the Department introduced an arbitrary formula stating that only ?40,728 was refundable, leading to a revised refund claim of ?1,66,990, which was denied by Revenue.

3. The Revenue argued that the Commissioner (Appeals) correctly denied the refund of ?5,86,485, stating that the appellant was entitled to only ?40,728 based on the Adjudication order's discussion.

4. After hearing both sides and examining the records, it was found that both parties agreed on the material facts until the adjudication resulted in a refund dispute over the cash element of the duty paid. The appellant claimed entitlement to a refund of ?1,66,990, as it had already taken credit of ?4,60,225 as Cenvat credit.

5. The absence of a legal provision to reduce the refund by adjusting duty liability arbitrarily between DEPB scrips and cash supported the appellant's claim for the full refund amount. The Adjudicating Authority was directed to verify the payment details and grant the refund, including any applicable interest, without being influenced by the Commissioner (Appeals)'s findings.

6. The matter was remanded with specific directions to conclude the refund process by the end of June 2016, focusing solely on the refund amount of ?1,66,990 as per the legal provisions.