2025 (1) TMI 1219 - AT - Customs

Refund of export duty paid by Vedanta Ltd. (formerly Sesa Goa Ltd.) on iron ore exports - export duty assessment was provisional or final - rejection of claim for interest on the ground that the refund was granted within 8 weeks from the date of the Calcutta High Court s order - rectification under Section 154 of the Customs Act - relevant date of interest - relevant rate of interest. Whether the assessment is Provisional as is being claimed by the appellant or is Final as is being claimed by the Revenue? - HELD THAT - The Adjudicating authority after considering the Tribunal s no uncertain order recorded the entire chronological event and took the stand that the appellant has filed the refund claim on 05.08.2022. In a carefully drafted order he holds that the appellant has not opted for Provisional Assessment because of which no sample was drawn nor was any test conducted. Therefore as per him it is a case of Final Assessment. Thus for all purposes it is a mere case of rectification in view of the decision of the Tribunal and also to follow the procedure of Gangdhar Supreme Court ruling and the CBIC s circular 04/2012 Cus dated 17.2.2012. Whether this is a case of Section 154 Rectification of the Finally assessed order as is being claimed by the Revenue or is a case of finalization of assessment as is being claimed by the appellant? - HELD THAT - Since lot of discussion has taken place and Tribunal and High Court have held that it is a case of omission and the rectification is required to be carried out we take the view that it is a case of Section 154. Since the rectification was required to be carried out for the period 2007-2008 and all the documents were available with the Revenue by May 2009 itself the Rectification should have been carried out based on the request made on 01.10.2009. No attempt was made to take up this request. Even after this matter reached the Commissioner (Appeals) and it was held by him that the issue will call for rectification under Section 154 his order was not followed - the Adjudicating authority has also gone on to decide the issue in terms of Section 154 and has cited the provisions of Section 27 while granting the refund. Whether any interest is payable to the appellant? - HELD THAT - Admittedly due to this inordinate delay the appellant would have been compelled to borrow from banks on payment of interest - the Ranbaxy judgement 2011 (10) TMI 16 - SUPREME COURT of the Hon ble Supreme Court would be squarely applicable to the facts of the present case. This is a case where the erroneously excess Export Duty was collected from the appellant during the period 2007-2008. After following up from 2009 onwards for proper rectification of the assessment order and litigation at various forum finally the refund was granted on 5.9.2024. In terms of Ranbaxy judgement the appellant would be eligible interest on the refund amount granted to them. In the present case the delay in taking up the issue for re-assessment by the Revenue was to the tune of more than 14 years. Hence the decision of the Hon ble Supreme Cour in the cited case of Sandvik Asia 2006 (1) TMI 55 - SUPREME COURT is squarely applicable where it was held that There cannot be any doubt that the award of interest on the refunded amount is as per the statute provisions of law as it then stood and on the peculiar facts and circumstances of each case. When a specific provision has been made under the statute such provision has to govern the field. Therefore the Court has to take all relevant factors into consideration while awarding the rate of interest on the compensation. If they are found to be eligible to interest what would be the relevant date of interest? - HELD THAT - It is seen that the appellant has filed their first letter seeking the finalization of assessment on 26.05.2009 for the Export Duty paid during 2007-2008. They have subsequently requested for rectification in terms of Section 154 on 01.10.2009. The refund has been given to the appellant only after the rectification under Section 154 has been carried out as can be observed from the OIO dated 5.9.2023 - The High Court in all their Orders and Tribunal in their order have taken cognizance of this OIA and have made specific reference that no further appeal was preferred by the Revenue against this OIA and in fact after about 5 years from this OIA an OIO was passed. The subsequent events resulting in the High Court Orders and Tribunal orders holding that rectification under Section 154 also emanate basically from this OIA dated 11.10.2010 - 11.10.2010 should be taken as the date on which the consequential refund would accrue. Since the supporting documents were already available with the Revenue on 26.05.2009 when the first letter was filed and on 01.10.2009 when the rectification request letter was filed the Revenue could have completed the rectification/re-assessment within 3 months from 11.10.2010 OIA order date . After allowing the 3 months from 11.10.2010 the interest would be payable from 11.01.2011. The Revenue is directed to pay the interest from 11.01.2011 till 05/06.09.2023 the date on which the refund was paid. If the interest is payable what would be the rate of interest to be paid? - HELD THAT - In the present case the Export Duty was paid at the time of Exports and the excess Export Duty paid remained with the Revenue till it was refunded. In the OIO it has been held that the appellant was not required to pay the Export Duty @ Rs.300 PMT and was required to pay the same @ Rs.50 PMT only. Thus the amount retained by the Revenue would be akin to the appellant making the payment during the course of investigation - the appellant is eligible to get the interest @ 12% per annum from 11.01.2011 to 5/6.09.2023. Conclusion - i) Though the appellant has claimed this to be a case of Provisional Assessment duly finalized on 5.9.2023 the view cannot be accepted since there is nothing to indicate that they have opted for Provisional Assessment. After filing their letter on 18.05.2009 26.05.2009 seeking Finalization of Provisional Assessment they themselves have requested for rectification in terms of Section 154. This request has been considered and endorsed by the High Court and Tribunal. ii) This is the case of rectification being carried out by the Revenue in terms of Section 154 of Customs Act 1962 as directed by the Hon ble High Court resulting in re-assessment Order being passed by the Adjudicating authority on 05.09.2023. iii) The case falls under the category (b) and the provisions of Section 27A are attracted and accordingly interest is required to be paid. iv)The date of filing of the refund claim is being taken as 11.10.2010 when the OIA has been passed directing the Adjudicating authority to carry out the necessary rectification . After giving three months time from this date the interest is payable from 11.01.2011 till 5/6.09.2023 when the refund amount was finally paid. v) The interest is payable @ 12 p.a. Appeal allowed.

Summary

The judgment involves a dispute over the refund of export duty paid by Vedanta Ltd. (formerly Sesa Goa Ltd.) on iron ore exports between June 2007 and March 2008. The primary issues revolve around whether the export duty assessment was provisional or final, whether the case involved rectification under Section 154 of the Customs Act, the entitlement to interest on the refund, and the applicable rate and period for such interest.

Issues Presented and Considered:

(a) Whether the assessment of export duty was provisional or final.

(b) Whether the case involved rectification of a final order under Section 154 of the Customs Act.

(c) Whether interest is payable on the refund of the export duty.

(d) If interest is payable, the relevant date from which interest should be calculated.

(e) The applicable rate of interest on the refund.

Issue-wise Detailed Analysis:

(a) Provisional vs. Final Assessment:

The appellant claimed the assessment was provisional, necessitating finalization. However, the Court found no indication of a provisional assessment request. The appellant's request for rectification under Section 154, supported by the Tribunal and High Court, indicated the assessment was final but required rectification due to errors.

(b) Rectification under Section 154:

The Court determined the case involved rectification under Section 154, as directed by the High Court and Tribunal. The rectification was necessary due to errors in the initial assessment, which did not consider moisture content in determining the Fe content, contrary to the Supreme Court's guidelines in the Gangadhar Narshingdas Agarwal case.

(c) Entitlement to Interest:

The Court held that interest was payable on the refund under Section 27A of the Customs Act, relying on the Supreme Court's decisions in Ranbaxy Laboratories Ltd. and Sandvik Asia Ltd. The appellant's money was unjustifiably withheld for over 14 years, entitling them to interest.

(d) Relevant Date for Interest Calculation:

The Court determined that the relevant date for interest calculation was 11.10.2010, the date of the Commissioner (Appeals) order directing rectification. Interest was payable from 11.01.2011, allowing three months for compliance, until the refund was paid on 5/6.09.2023.

(e) Rate of Interest:

The Court, referencing case laws like Riba Textiles and Parle Agro, held that the interest rate should be 12% per annum, considering the protracted delay and financial burden on the appellant.

Significant Holdings:

The Court concluded that the assessment required rectification under Section 154, entitling the appellant to a refund with interest. The interest was to be calculated from 11.01.2011 at a rate of 12% per annum, payable within eight weeks from the order's communication.

In summary, the Court allowed the appeal, granting interest on the refunded export duty at 12% per annum from 11.01.2011 to 5/6.09.2023, emphasizing the importance of adhering to judicial orders and the financial impact of prolonged delays on the appellant.