1992 (1) TMI 211 - AT - Customs

Summary

Issues Involved:
1. Refund claim rejection under Section 27 of the Customs Act, 1962.
2. Applicability of Exemption Notification No. 262/58-Cus.
3. Inclusion of Customs duty in the bid amount.
4. Requirement of assessment for refund eligibility.
5. Guarantee against breaking up of vessels.

Detailed Analysis:

1. Refund Claim Rejection under Section 27 of the Customs Act, 1962:
The appellants challenged the rejection of their refund claim by the Assistant Collector of Customs, which was upheld by the Collector of Customs (Appeals). The primary contention was that the Customs duty was paid by the Andaman and Nicobar Islands Administration and should be refunded under Section 27 of the Customs Act, 1962. The Assistant Collector rejected the claim stating there was no assessment order, hence no refund could be considered. However, the appellate tribunal found that Section 27(5) of the Customs Act, 1962, applies in this case, which allows for a refund of any amount collected as duty if the goods were not leviable to duty or were entitled to exemption.

2. Applicability of Exemption Notification No. 262/58-Cus:
The appellants argued that the three vessels were ocean-going and not intended for breaking up, thus qualifying for exemption under Notification No. 262/58-Cus. The Collector of Customs (Appeals) rejected this claim, stating the absence of a guarantee that the vessels would not be broken up in the future. The tribunal noted that the exemption notification aims to encourage companies engaged in fishing and that the appellants could be required to execute a bond or guarantee to ensure compliance with the exemption conditions.

3. Inclusion of Customs Duty in the Bid Amount:
The Assistant Collector and the learned SDR contended that the bid amount did not include Customs duty, as the trawlers were exempt from duty at the relevant time. However, the tribunal found evidence that the Andaman and Nicobar Islands Administration had remitted 51.7% of the bid amount to the Customs Department as duty. This indicated that the bid amount did include Customs duty, contradicting the lower authorities' findings.

4. Requirement of Assessment for Refund Eligibility:
The Assistant Collector and the SDR argued that a refund under Section 27 requires an assessment order, which was not present in this case. The tribunal clarified that while Section 27(1) requires an assessment for a refund, Section 27(5) allows for a refund of any amount collected as duty if the goods were not leviable to duty or were entitled to exemption. Thus, the appellants' claim falls under Section 27(5), making the rejection based on the absence of an assessment legally incorrect.

5. Guarantee Against Breaking Up of Vessels:
The Collector of Customs (Appeals) rejected the refund claim on the grounds that there was no guarantee that the vessels would not be broken up in the future. The tribunal held that the appellants could be required to execute a bond or guarantee to ensure the vessels are not broken up, and the denial of the refund on this basis was not legally justified. The tribunal emphasized that accepting such an argument would render the exemption notification ineffective.

Conclusion:
The tribunal concluded that the appellants are entitled to a refund of the Customs duty paid, subject to executing a personal bond or guarantee that the vessels will not be broken up. The appeal was allowed, directing the Assistant Collector to refund the duty amount of Rs. 6,81,923.00 to the appellants, subject to the correct calculation and the execution of the required bond/guarantee. The miscellaneous application was also disposed of accordingly.