2022 (9) TMI 956 - AT - Customs

Refund claim - amount paid at the time of provisional assessment - amount is found to be paid in excess on finalisation of the assessment is refundable under the provisions of section 18 for sub-section (4) of the Act - principles of unjust enrichment - HELD THAT - The provisions of provisional assessment as given in Section 18 of the Act, is a self complete code. It provides for the conditions in which provisional assessment shall be made and further provides that pursuant to the provisional assessment, if any, document or information as required by the proper officer for final assessment, the importer exporter, shall submit such document or information within such time as the proper officer shall require. Further, sub-section (2) of Section 18 provides when duty leviable on such goods is assessed finally or reassessed by the proper officer, then the amount paid shall be adjusted against the duty finally assessed or reassessed, as the case may be, and if the amount so paid is short of the duty finally assessed or reassessed, as the case may be, the importer or the exporter of the goods shall pay the deficiency, or otherwise be entitled to a refund, as the case may be. There is no application of Section 27 for refund arising upon finalisation of the provisional assessment. Further the refund is payable to the appellant - assessee with interest as per sub-section 4 of Section 18, subject to the test of unjust enrichment as required under sub-section 5. Refund allowed - the importer respondent is entitled to interest at the prescribed rate as per Section 18(4) read with Section 27A of the Act - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the amount paid at the time of provisional assessment, found to be in excess on finalization, is refundable under Section 18(4) of the Act?
2. Whether the refund application was rightly rejected as time-barred under Section 27 of the Customs Act?

Analysis:

Issue 1:
The appeal by the revenue revolves around the question of the refundability of the excess amount paid during provisional assessment. The Commissioner (Appeals) held that the finalization order lacked specificity on valuation aspects, leading to a remand for reassessment. The Commissioner emphasized that every aspect, including valuation, becomes provisional during provisional assessment. The rejection of declared value was deemed improper under Customs Valuation Rules, 2007. The Commissioner set aside the enhanced valuation for certain bills of entry, directing reassessment at the declared value with consequential relief. The respondent then sought a refund of the excess amount paid, which was initially rejected by the Dy. Commissioner citing limitation under Section 27 of the Customs Act.

Issue 2:
The respondent, aggrieved by the rejection of the refund claim, appealed to the Ld. Commissioner (Appeals). The Ld. Commissioner observed that Section 18(4) of the Customs Act applies to refunds arising from finalization of provisional assessments. It was noted that the assessing authority should allow refund suo moto upon finalization without waiting for a claim from the importer. The Ld. Commissioner relied on the High Court ruling in CCE vs. Sayonara Exports Private Ltd., emphasizing that the excess amount deposited did not pertain to duty and remained a deposit with the Government, thus not governed by Section 27. The Ld. Commissioner remanded the matter to ascertain the excess payment and determine the admissibility of the claim on its merits.

The Tribunal, after considering the contentions, found that Section 18 of the Act constitutes a self-contained code for provisional assessment. The Tribunal held that Section 27 does not apply to refunds arising from finalization of provisional assessments. Refund was deemed payable to the appellant with interest as per Section 18(4), subject to the test of unjust enrichment as required under sub-section 5. The Tribunal dismissed the appeal by the revenue, allowing the refund and entitling the importer to interest at the prescribed rate under Section 18(4) read with Section 27A of the Act.