2001 (9) TMI 302 - SC - Customs

Whether the refund was properly allowed on merits namely whether what was imported were accessories or spare parts? Held that - Just as the Assistant Collector had considered each item and came to the conclusion that they were spares it was incumbent upon him to give details of the other items before coming to the conclusion that they were accessories and not spares. It is to be borne in mind that the duty was paid by the respondent on the basis of the claim of the appellant namely that what was imported were spares and not accessories. The refund could be ordered only if there was a positive finding based on tangible material to the effect that what was imported were accessories and not spares. It was necessary therefore for the Assistant Collector to have examined and given details thereof in the order which was passed. This not having been done apart from anything else the Commissioner was justified in passing an order under Section 129D and directing the filing of an appeal. The Commissioner (Appeals) did not deal with the question as to whether what was imported and in respect of which the refund was allowed were spares or accessories. This question was also not gone into by the Tribunal. The Commissioner (Appeals) did not decide it because it was of the opinion that the application for refund itself was barred by time inasmuch as the application for refund is not to be regarded as having been filed within time. It is incumbent upon the Commissioner to give a finding with regard to the goods imported as to whether they were spares as claimed by the Department or accessories as claimed by the respondent. The orders of the Commissioner (Appeals) and the Tribunal are therefore liable to be set aside. Appeal allowed.

Issues:
1. Import of goods under exemption notification.
2. Date of filing the application for refund.
3. Refund of customs duty on accessories and spare parts.
4. Legal validity of the order of refund.
5. Scope of powers of the Collector of Customs under Section 129D(2).

Issue 1: Import of goods under exemption notification
The respondent imported goods claiming them to be accessories exempt from customs duty under an exemption notification. The dispute arose regarding the classification of the imported goods as accessories or spare parts, determining the applicability of the exemption.

Issue 2: Date of filing the application for refund
A discrepancy existed between the parties regarding the date of filing the application for refund of customs duty. The respondent claimed the application was filed on 5th March, 1993, while the appellant contested that it was received on 7th April, 1993, leading to a disagreement on the timeliness of the application.

Issue 3: Refund of customs duty on accessories and spare parts
The Assistant Collector allowed a refund for accessories but denied it for spare parts after examining the nature of the goods. The subsequent authorities, including the Commissioner (Appeals) and the Tribunal, differed on the classification of the goods as accessories or spare parts, impacting the refund eligibility.

Issue 4: Legal validity of the order of refund
The Commissioner under Section 129D of the Customs Act found the order of refund not legal and proper based on the grounds presented, directing an appeal to be filed. The Supreme Court emphasized the necessity of a positive finding supported by tangible material to justify a refund, highlighting the shortcomings in the Assistant Collector's order and subsequent appellate decisions.

Issue 5: Scope of powers of the Collector of Customs under Section 129D(2)
The Tribunal questioned the Collector's powers under Section 129D(2), contending limitations on considering fresh evidence. However, the Supreme Court clarified that the Collector's examination was based on existing record facts, not exceeding the permissible scope, thereby overturning the Tribunal's interpretation.

In conclusion, the Supreme Court allowed the appeals, setting aside the Tribunal and Commissioner (Appeals) orders, and remanded the case for a decision on the correctness of the refund granted for the imported goods, emphasizing the importance of a thorough examination of facts and adherence to legal procedures in customs duty refund cases.

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