2017 (7) TMI 670 - AT - Customs

Maintainability of rejection of refund claim - case of Revenue is that the refund claim cannot be entertained / decided until finalization of the case by DRI and adjudication by the competent authority, that till then there is no cause of action in the refund section, therefore, their claim is not maintainable - Held that - the refund claim under the CA, 1962 would arise only if the claim satisfies the provisions of section 27 ibid, that in this case, the sum of ₹ 32 lakhs had been voluntarily paid well in advance of any notice being issued to the appellants, for payment of duty, therefore question of assessment to duty mentioned in section 27 would certainly would not arise until the order of assessment has been made, consequently, there would be no cause of action of refund ad any claim thereof would not be maintainable. It emerges that the entire exercise was a meticulously planned one by the appellants who utilized loopholes in the system to obtain clearances of imported goods with their definite knowledge under confiscation. Their conduct cannot be but otherwise considered as one of deceit and contumacious. The order of the lower appellate authority in respect of confiscation of sale proceeds of the illegally removed imported goods and confirmation of penalty of ₹ 4,00,000/- under section 112(a) ibid is therefore just, fair and legal and does not call for any interference. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the rejection of the refund claim in Appeal No. C/40/2007 is justified.
2. Whether the order upholding confiscation of sale proceeds and imposition of penalties in Appeal No. C/42143/2013 is valid.

Analysis:

Issue 1:
In Appeal No. C/40/2007, the appellant filed a refund claim after depositing &8377; 32 lakhs towards duty liability. The Customs House issued a notice stating deficiencies in the claim. The appellant requested to keep the claim pending until adjudication results were known. The Deputy Commissioner rejected the claim, stating it could not be decided until the case was finalized. The lower appellate authority found that the claim did not satisfy the provisions of the Customs Act, as the duty had been paid voluntarily without an assessment order. The clock of limitation starts only upon receipt of an adjudication order, making the refund claim premature. The rejection was upheld, as the claim did not have a cause of action for refund under section 27 of the Customs Act.

Issue 2:
In Appeal No. C/42143/2013, the appellant cleared confiscated goods after depositing &8377; 32 lakhs towards duty. The original authority ordered confiscation of the goods and the amount paid by the appellant, along with penalties. The lower appellate authority partially allowed the appeal, reducing the confiscation amount but upholding the penalty. The appellant challenged the basis for the deposit and confiscation. The court found the appellant's arguments unconvincing, noting their knowledge of the goods' confiscated nature during clearance. The lower authority's decision to confiscate sale proceeds and impose penalties was deemed fair and legal. The order for refunding the balance amount was upheld. The appellant's deceptive conduct in obtaining clearance for confiscated goods led to the dismissal of the appeal.

In conclusion, both appeals were dismissed, with the court finding no merit in the challenges raised by the appellants. The decisions of the lower appellate authorities were upheld, and the refund of the balance amount was ordered to be done in accordance with the law.