2024 (6) TMI 1429 - AT - Customs

Refund of additional duty paid on imported mobile phones - rejection on the ground that the appellant had not provided reassessed Bills of Entry - requirement of determination of amount of duty under section 28(8) within six months from the date of issuance of the SCN. Whether the requirement of section 28(9) of the Customs Act that the proper officer should determine the amount of duty under section 28(8) within six months from the date of issuance of the show cause notice is satisfied in the facts and circumstances of the case? - HELD THAT - It is seen that after the notice has been issued under sub-section (1) of section 28 the proper officer has to determine the amount of duty under sub-section (8) but this has to be done within six months from the date of notice as contemplated under sub-section (9) of section 28 of the Customs Act. In the present case the notice under sub-section (1) of section 28 of the Customs Act was issued to the appellant on 26.09.2018 but it is only on 24.05.2021 that the Principal Commissioner determined the amount of duty under sub-section (8) of section 28 of the Customs Act. According to the department though the time limit of six months for such determination may have expired on 25.03.2019 but in view of the provisions of the Relaxation Act and the orders passed by the Supreme Court in suo-moto proceedings relating to Covid Pandemic the period stood extended and the Chief Commissioner in terms of the proviso to sub-section (9) of section 28 also gave extension upto 30.06.2021. Thus according to the department the Commissioner determined the amount of duty within the time stipulated. According to the appellant the provisions of the Relaxation Act or the directions contained in the orders passed by the Supreme Court in suo-moto proceedings do not come to the aid of the department and so the order deserves to be set aside for this reason alone. The adjudication of the two show cause notices dated 26.09.2018 had been kept in abeyance owing to pendency of the appeal filed by the department before the Supreme Court and this reason ceased to exist on 18.09.2019 when the Supreme Court decided the appeal filed by the department in ITC. The period of six months from 18.09.2019 would expire on 17.03.2020. The show cause notices therefore in view of the orders dated 08.03.2021 27.04.2021 and 23.09.2021 could have been adjudicated upto 02.10.2021 and in the present case they were adjudicated on 24.05.2021. Thus the show cause notices were adjudicated within time. It is also seen that the Chief Commissioner had also extended the time for adjudicating the show cause notices upto 30.06.2021 by exercising powers under the proviso to section 28(9) of the Customs Act. It also needs to be noticed that while both the importer and the Revenue can appeal to the Commissioner (Appeals) under section 128 of the Customs Act against an order of assessment or self-assessment of a Bill of Entry the proper officer has another option of issuing a show cause notice under section 28 of the Customs Act to demand and recover duties erroneously refunded. This is clear from a plain reading of section 28 of the Customs Act and in Collector of Central Excise Kanpur vs. Flock (India) Pvt. Ltd. 2000 (8) TMI 88 - SUPREME COURT the Supreme Court also held that an assessment can be modified either through an appeal or under section 28 of the Customs Act. The appellant is therefore not justified in asserting that the notice under section 28 of the Customs Act could not have been issued to the appellant claiming erroneously granted refund as the only remedy available to the department was to challenge the refund order by filing an appeal before the Commissioner (Appeals). Conclusion - It is therefore not possible to accept the contention of the learned counsel for the appellant that order dated 24.05.2021 should be set aside for the sole reason that it was passed beyond the time period contemplated under section 28(9) of the Customs Act. Seeking exclusion of the time period from the date of out of charge of the respective Bills of Entry till the date of judgment of the Supreme Court in ITC 2019 (9) TMI 802 - SUPREME COURT (LB) - HELD THAT - The conditions stipulated in section 14 of the Limitation Act were not satisfied by the appellant for the reason that the matter that was earlier pursued by the appellant before the department related to refund of Additional Duty and not re-assessment of Bills of Entry which relief had been claimed in the appeals filed before the Commissioner (Appeals) and even if it is assumed that the appellant was pursuing the same matter the refund applications were filed before the correct authority and there was no defect in jurisdiction. The Commissioner (Appeals) also held that the appellant was required to challenge the self-assessment before claiming refund and so the filing of the refund applications instead of challenging the assessment was not in good faith and was out of commercial consideration to reap the benefits arising out of the decision of the Supreme Court in SRF. Whether section 14 of the Limitation Act can be applied to proceedings under section 128 of the Customs Act? - HELD THAT - This aspect was examined at length by the Supreme Court in M.P. Steel Corporation vs. Commissioner of Central Excise 2015 (4) TMI 849 - SUPREME COURT . The Supreme Court held that though on a plain reading of the provisions of the Limitation Act it would be clear that suits appeals and applications are only to be considered from the limitation point of view if they are filed in courts and not before quasi-judicial bodies but after making reference to the decision of the Supreme Court in P. Sarathi vs. State Bank of India 2000 (5) TMI 1063 - SUPREME COURT the Supreme Court observed that it would also be applicable to proceedings before Tribunals. In the present case the appellant had also bona fide pursued the remedy of filing refund applications before the Deputy Commissioner instead of filing an appeal before the Commissioner (Appeals) against the order of assessment. The Delhi High Court had also at the instance of the appellant directed that refund applications should be allowed and refund should be sanctioned - Merely because the appellant had filed applications for refund of this Additional Duty of customs before the Deputy Commissioner and subsequently an appeal before the Commissioner (Appeals) for modifying the order of assessment would not mean that the two proceedings do not relate to the same matter. If it is held in the appeals that the appellant was not required to pay the Additional Duty of customs it would result in granting relief of refund of the Additional Duty of customs. It also cannot be denied that both the proceedings were before a quasi-judicial authority. The Supreme Court held in M.P. Steel 2015 (4) TMI 849 - SUPREME COURT that this would not be fatal for the reason that though section 14 of the Limitation Act may not strictly apply yet the principles of section 14 of the Limitation Act will get attracted and that section 14 of the Limitation Act should be liberally construed to advance the cause of justice. The principles laid down by the Supreme Court in M.P. Steel would therefore apply in the present case for excluding the time period under section 14 of the Limitation Act from the date of filing of the refund applications on 25.09.2015 upto 18.09.2019 on which date the Supreme Court decided ITC. Whether the appeals can still be said to have been filed within the time period stipulated in section 128 of the Customs Act even if the aforesaid period from 25.09.2015 upto 18.09.2019 is excluded for the purpose of calculating the limitation period? - HELD THAT - In the instant case the Bills of Entry were self-assessed by the appellant and were filed from 07.10.2014 to 17.07.2015. They were given out of charge from 07.09.2014 to 17.07.2015. Even if the last of this date i.e. 17.07.2015 is taken into consideration the refund applications were filed only on 25.09.2015. The appellant could have filed an appeal before the Commissioner (Appeals) within 60 days as provided under section 128(1) of the Customs Act. Thus the appeal could have been filed within 60 days from 17.07.2015 i.e. upto 16.09.2015 and a delay of 30 days only after the expiry of the said period of 60 days could be condoned. The decision of the Supreme Court in Singh Enterprises 2007 (12) TMI 11 - SUPREME COURT emphasises that the language of the proviso to section 35(1) of the Central Excise Act 1944 makes it clear that the Appellate Authority has no power to allow the appeal to be presented beyond the period of thirty days after the normal period of limitation of sixty days. In such circumstances the Supreme Court held that there is complete exclusion of section 5 of the Limitation Act. Conclusion - Even though the benefit of section 14 of the Limitation Act for exclusion of time period from 25.09.2015 upto 18.09.2019 would be available to the appellant but still the 31 appeals would have to be dismissed as having been filed beyond the time period contemplated under section 128(1) of the Customs Act. The Commissioner (Appeals) therefore committed no illegality in dismissing the appeals. Appeals dismissed.

Summary

The judgment from the Appellate Tribunal CESTAT Delhi involves multiple customs appeals filed by an appellant challenging orders related to the refund of additional duty paid on imported mobile phones. The appeals raise significant issues concerning the interpretation and application of the Customs Act, 1962, particularly regarding the recovery of erroneously refunded duties and the application of limitation periods for filing appeals.

Issues Presented and Considered:

The core issues considered in this judgment include:

• Whether the adjudication of show cause notices for recovery of erroneously refunded amounts was conducted within the statutory time limits prescribed under section 28 of the Customs Act.
• Whether the refunds granted to the appellant were erroneous and subject to recovery based on subsequent legal developments.
• Whether the appellant was entitled to the benefit of section 14 of the Limitation Act for excluding time spent in pursuing refund applications, thereby allowing the appeals for reassessment of Bills of Entry to be considered timely.

Issue-Wise Detailed Analysis:

1. Adjudication of Show Cause Notices:

The Tribunal examined whether the show cause notices issued for recovering the erroneously refunded amounts were adjudicated within the time limits specified under section 28(9) of the Customs Act. The Tribunal considered the impact of the Relaxation Act and the Supreme Court's orders extending limitation periods due to the COVID-19 pandemic. It concluded that the adjudication was timely, as the period from 15.03.2020 to 02.10.2021 was excluded from the limitation computation, allowing the adjudication to occur within the extended timeframe.

2. Erroneous Refunds:

The Tribunal addressed whether the refunds granted based on the Delhi High Court's directions were erroneous following the Supreme Court's decision in ITC, which clarified that refunds could not be granted without first modifying the assessment orders. The Tribunal held that the refunds were indeed erroneous, as they were granted without the necessary modification of the assessment orders, and thus, the recovery was justified.

3. Application of Section 14 of the Limitation Act:

The Tribunal evaluated whether the appellant could benefit from section 14 of the Limitation Act, which allows for exclusion of time spent in bona fide proceedings before a court without jurisdiction. The Tribunal found that, although the appellant pursued refund applications in good faith, the appeals for reassessment were still filed beyond the permissible period under section 128 of the Customs Act. The Tribunal emphasized that even with the exclusion of time under section 14, the appeals were filed outside the maximum allowable period, leading to their dismissal.

Significant Holdings:

The Tribunal upheld the orders of the lower authorities, affirming the recovery of erroneously refunded amounts and dismissing the appeals for reassessment of Bills of Entry as time-barred. The judgment reinforced the principle that refunds cannot be granted without modifying assessment orders and highlighted the importance of adhering to statutory time limits for appeals, even when section 14 of the Limitation Act is applicable.

In conclusion, the Tribunal's decision underscores the necessity for importers to challenge assessment orders through appropriate legal channels before seeking refunds and the critical importance of observing statutory deadlines for filing appeals under the Customs Act.