2005 (8) TMI 277 - AT - Customs

Refund arising out of correction of arithmetical and clerical errors u/s 154 - Assessment order - excess duty paid - limitation period prescribed u/s 27 - Unjust enrichment - HELD THAT - We first take up the second objection raised by the learned SDR that no refund claim can be made without first appealing against the assessment order. We are not convinced of this argument. Section 27(1) itself provides for claim against duty paid in pursuance of an order of assessment. Such a specific legal provision can not be ignored which confers a right on a claimant. It has not made filing refund claim conditional upon filing an appeal against the assessment order. The learned SDR has cited the decision of the Hon'ble Supreme Court in the case of Priya Blue 2004 (9) TMI 105 - SUPREME COURT , We note that this is a decision by a Bench of two Judges, which has not considered the decision of the three Judges Bench rendered in the case of Karnataka Power Corporation Ltd. v. CC 2002 (4) TMI 79 - SUPREME COURT , in which the Hon'ble Supreme Court permitted consideration of a refund claim though no appeal was filed against the assessment made on the Bill of Entry. We are bound to follow the ratio of the decision of the Larger Bench of the Hon'ble Supreme Court. We, therefore, reject the contention of the learned SDR that the appellants' claim cannot be considered because they have not filed any appeal against the assessment made on the Bill of Entry. Whether a refund claim can be considered as a result of correction of clerical error u/s 154 independent of Section 27(1) and more particularly without taking into account the time limits prescribed therein - We find that the learned consultant for the appellants has cited decision of the Hon'ble High Court of Bombay in the case of Keshari Steels 1996 (9) TMI 154 - HIGH COURT OF JUDICATURE AT BOMBAY of which the latter decision has also been confirmed by the Hon'ble Supreme Court 1997 (12) TMI 643 - SC ORDER . Both these decisions permit refunds in similar cases of correction of errors u/s 154 independent of the provisions of Section 27(1). As such, we hold that refunds as a consequence of correction of clerical error under the independent provision of Section 154 is admissible without filing a refund claim under Section 27(1). We also note that Section 154 is a latter provision of law under which a correction can be made at any time. We further note that Section 27(1) has not been given overriding effect over other sections of the Customs Act, 1962 as has been done in the case of Section 27(2). Unjust enrichment - We note that in paragraphs 99 (iii) and (x) in Mafatlal 1996 (12) TMI 50 - SUPREME COURT , the Hon'ble Supreme Court has also ruled that the doctrine of unjust enrichment is a just and salutary doctrine and that all refund claims (except those arising as a result of a levy being declared unconstitutional) have to be dealt in accordance with Section 27(2) in view of provisions contained in Section 27(3). Accordingly, we hold that the appellants are entitled to refund arising out of correction of clerical mistake u/s 154 of the Customs Act, 1962 subject to the question of unjust enrichment being examined by the original authority. As such, we set aside the impugned orders and allow the appeal by remand to the original authority in the above terms. The original authority shall consider the refund claim and allow the appellants reasonable opportunity of hearing to prove that they have not passed on the incidence of the extra duty to any other person.

Summary

Issues involved:
1. Admissibility of refund arising out of correction of clerical error under Section 154 of the Customs Act, 1962 independent of Section 27.
2. Time limitation for filing refund claims under Section 27 of the Customs Act, 1962.
3. Distinction in time limits for refund claims between Government Departments and Government Undertakings.
4. Requirement of filing an appeal against the assessment order before claiming a refund.
5. Consideration of unjust enrichment under Section 27(2) in refund claims.

Analysis:

Issue 1: Admissibility of refund under Section 154 independent of Section 27:
The appellant claimed that the excess duty paid was due to a clerical error in applying the wrong exchange rate. The consultant argued that corrections under Section 154 are admissible independently of Section 27, citing relevant case laws. The Tribunal agreed, stating that clerical errors fall under Section 154, allowing refunds without the need for a claim under Section 27. The Tribunal emphasized that Section 154 provides for corrections at any time, and Section 27(1) does not override other provisions like Section 154.

Issue 2: Time limitation for refund claims under Section 27:
The respondent argued that the refund claim was time-barred under Section 27 as it was filed after six months from the duty payment. The Tribunal noted the distinction in time limits for different entities but held that the appellants, being a Government undertaking, were entitled to the one-year time limit. The Tribunal questioned the rationale behind this distinction but upheld the extended time limit for the appellant.

Issue 3: Distinction in time limits for Government Departments and Government Undertakings:
The Tribunal acknowledged the distinction in time limits for refund claims between Government Departments and Government Undertakings under Section 27. Despite questioning the reason for this differentiation, the Tribunal upheld the extended time limit for the appellant as a Government undertaking.

Issue 4: Requirement of filing an appeal before claiming a refund:
The respondent contended that a refund claim cannot be made without first appealing against the assessment order, citing relevant case laws. However, the Tribunal disagreed, stating that Section 27(1) allows for a refund claim against duty paid without mandating an appeal against the assessment order. The Tribunal relied on a Supreme Court decision permitting consideration of a refund claim without filing an appeal against the assessment.

Issue 5: Consideration of unjust enrichment under Section 27(2) in refund claims:
The Tribunal addressed the concern of unjust enrichment under Section 27(2) and noted that refunds on clerical error corrections are subject to this provision. Citing case laws, the Tribunal emphasized the importance of examining unjust enrichment in refund claims. The Tribunal directed the original authority to assess the refund claim while considering the issue of unjust enrichment.

In conclusion, the Tribunal allowed the appeal, remanding the case to the original authority for considering the refund claim arising from a clerical error under Section 154, subject to examination of unjust enrichment. The judgment clarified the admissibility of refunds under Section 154 independent of Section 27 and highlighted the importance of addressing unjust enrichment in refund claims.