2024 (4) TMI 1021 - AT - Customs

Refund Of excess amount of duty paid on short shipped quantity - Valuation - erroneous calculation of FOB value of the subject consignment - Export of Metallurgical Grade Gibbsitic Bauxite of Indian Origin - 100% EOU - violation of principles of natural justice - whether the refund claim was considered by the adjudicating authority or not - HELD THAT - It is clear from reading provision of sec.14 for Valuation of goods, that what is exported are goods as presented for export at Indian port with the value having been indicated as the transaction value being the value for export from India for delivery at the time in place of exportation (being India) in the case of export goods and such value commonly taken as FOB value. The goods exported were as per description of Metallurgical Grade Gibbstic Bauxite and goods were assessed in the country of exportation as per the price initially agreed. The goods remained in the sea and were during the shipment exposed to moisture. The moisture over and above permissible was found at the port of discharge and price was renegotiated and the fresh price was arrived at to avoid termination of contract due to slightly higher moisture content. Situation to that extent was similar to the contract of M/S. ORE CASE (INDIA) V/S. COMMISSIONER OF CUSTOMS, CENTRAL EXCISE S.TAX, BBSR-I AND COMMISSIONER OF CUSTOMS (PREVENTIVE), BHUBANESHWAR 2023 (10) TMI 757 - CESTAT KOLKATA Excepting that instead of humidity element it was ferrous content in that case. It is to be noted in that case, it is on record that assessment at the time of exportation was on provisional basis and subjected to the final outcome of ferrous contents. The ferrous contents in any case cannot be different, in normal course at either of the ports of export and import. However, in this case, it is not coming on records, as to whether the assessment was provisional, or whether the department was made aware of likely variance in prices due to higher moisture content which is likely to happen even in course of shipment being in the sea. Further whether any moisture content was declared in India at the time of export is not forthcoming. Again it has to be decided as to what was the export goods at the time of exportation and what was the price at the time of exportation as per the statutory provisions, indicated above. Matter is therefore, remanded back to the original adjudicating authority to check up on all these facts specially if the assessment was provisional or department was aware of the contract which provided for variance in price at the later stage. Further, since the department has not raised the issue initially that appeal was required to be filed by the party as per the decision of ITC case (cited supra). Department is precluded from raising the same in the instant remand proceeding. Party is free to raise its other legal objection if any. Appeal disposed of by way or remand.

Summary

Issues involved:

1. Short shipment of bauxite.
2. Erroneous calculation of FOB value.
3. Violation of principles of natural justice.
4. Entitlement to interest on delayed refund.

Summary:

1. Short shipment of bauxite:
The appellant exported 54,600 Wet Metric Tonne (WMT) of "Metallurgical Grade Gibbsitic Bauxite of Indian Origin" instead of the 55,000 WMT initially planned, resulting in a short shipment of 400 MT. This was certified by the Short Shipment Notice No. 54 dated 08.03.2013. Consequently, the appellant initially filed a refund claim of Rs. 67,731/- for the excess duty paid on the short-shipped quantity, which was sanctioned by the Assistant Commissioner.

2. Erroneous calculation of FOB value:
The FOB value was initially calculated based on the weight in WMT instead of Dry Metric Tonne (DMT) as per the agreement with the foreign purchaser. The correct weight in DMT was later determined at the discharge port by SGS China. The appellant re-submitted a refund claim of Rs. 13,33,879/- for the excess duty paid due to both the short shipment and the erroneous FOB calculation. However, the Assistant Commissioner only sanctioned Rs. 67,731/-, and the Commissioner (Appeals) upheld this decision, failing to consider the correct calculation of excess duty paid.

3. Violation of principles of natural justice:
The appellant argued that the Commissioner (Appeals) rejected the refund claim of Rs. 12,66,148/- without issuing a show cause notice or providing an opportunity to explain the eligibility of the refund. The Tribunal found that the excess duty payment was attributable not only to the short shipment but also to the weight difference due to moisture content. The correct duty payable was Rs. 79,79,097/-, making the appellant eligible for a refund of Rs. 13,33,879/-. The impugned order was found to be in violation of principles of natural justice and was required to be quashed.

4. Entitlement to interest on delayed refund:
The appellant claimed interest on the delayed refund as per the judgments of the Hon'ble Supreme Court and various High Courts. The Tribunal acknowledged that the Revenue is legally obligated to pay interest for the delay in refunding the amount.

Conclusion:
The Tribunal remanded the matter back to the original adjudicating authority to verify if the assessment was provisional and if the department was aware of the contract allowing for price variance due to moisture content. The department is precluded from raising new objections based on the ITC case decision. The appeal was disposed of by way of remand.