2024 (2) TMI 320 - AT - Customs

Doctrine of merger - Refund claim - refund hit by the limitation of time in spite of the importer having registered a Protest at the time of paying a deposit towards duty prior to adjudication - Section 27 of the Customs Act 1962 - HELD THAT - In Sai Exports 2022 (11) TMI 440 - CESTAT CHENNAI it was held that the second proviso of sub-section (1) of Section 27 states that the limitation of one year will not apply when duty is paid under protest. The question is whether sub-section (1B) of Section 27 which states that the limitation of one year has to be computed from the date of judgment, decree or order of court would come into application even if the duty is paid under protest. An assessee can be pay duty under protest by either filing a letter of protest as provided by the Rules or by filing an appeal against the order on the basis of which the duty has been deposited or by taking both the actions. Consequent to a letter of protest being filed the matter would come up for a decision before the appropriate forum and an order passed which automatically vacates the protest, whether the decision is in favour or against the assessee. If the order is in favour of the assessee he can file a refund claim within the statutory time period as per section 27 (1B) (b) of the Customs Act or if it goes against him he may file a further appeal against the said order as provided in law till the matter attains finality. The doctrine of merger which is a common law doctrine recognized by Courts on principles of propriety in the hierarchy of the justice delivery system protects the assessee s claim for refund as per section 27(1B)(b) ibid, once the protest is vacated. The doctrine implies that the order passed by a lower authority would lose its finality and efficacy in favour of an order passed by a higher authority before whom correctness of such an order may have been assailed in appeal or revision. Hence once an order is passed in a matter where a protest is vacated by the issue of an order by the proper officer the second proviso to section 27(1) ceases to apply and section 27(1B)(b) takes over. The lower authority has taken a view which is reasonable, legal and proper - the impugned order merits to be upheld - appeal disposed off.

Summary

Issues Involved:
1. Whether the refund claim filed on the basis of the CESTAT order is hit by the limitation of time despite the importer having registered a 'Protest' at the time of making a deposit towards duty.
2. Whether the refund claim is subject to unjust enrichment.

Summary:

Issue 1: Limitation of Time for Refund Claim
The appellant filed a refund claim 20 months after the CESTAT order dated 04/11/2013, which was initially paid under protest. The original authority and the Commissioner (Appeals) rejected the refund claim on the grounds of time-bar. The appellant argued that the limitation period does not apply when duty is paid under protest as per Section 27 of the Customs Act, 1962. The Tribunal noted that Section 27(1B) specifies a one-year limitation from the date of the court/tribunal order, but the second proviso to Section 27(1) excludes this limitation when duty is paid under protest.

The Tribunal referred to the Supreme Court's decision in Mafatlal Industries Ltd. and other relevant judgments, concluding that the filing of an appeal is construed as payment under protest. However, once an order finalizing the dispute is passed, the protest is vacated, and the limitation of one year under Section 27(1B) applies. The Tribunal held that the refund claim filed after 20 months was time-barred, as the protest was vacated by the Tribunal's final order.

Issue 2: Unjust Enrichment
The appellant contended that the amount paid was merely a deposit and not subject to unjust enrichment. They submitted a Chartered Accountant's certificate stating that the incidence of duty had not been passed to any person. The Tribunal did not specifically address unjust enrichment in detail, focusing primarily on the time-bar issue.

Conclusion:
The Tribunal upheld the lower authority's decision, rejecting the appeal on the grounds that the refund claim was time-barred under Section 27(1B)(b) of the Customs Act, 1962. The appeal was disposed of accordingly.