REFUND ARISING OUT OF APPELLATE ORDER

[Mr. M. GOVINDARAJAN]

Section 129E of the Customs Act deals with the deposit of duty and interest, penalty if any on filing appeal against an order which imposed duty, interest and penalty.  An application may be filed before the appellate authority to dispense with the deposit of such amount. If any appeal is allowed in favour of the assessee, the amount deposited already by the assessee for tax, interest and penalty shall be refunded to the assessee within 3 months from the date of order. Delay in payment of the same would attract interest payable from the date of appellate order till payment.

In ‘Sudha Silk House V. Commissioner of Customs, Chennai’ – 2008 (3) TMI 542 - CESTAT, BANGALORE it was held that when order-in-original has been set aside, the order-in-original refers to the amount which has been imposed therein. This itself is sufficient for granting relief to the assessee. No further documents are required from the parties to grant refund.   The review section can take an indemnity bond to secure the payment.

In ‘Commissioner of Customs, Cochin V. Shree Simandar Enterprises’ – 2012 (8) TMI 176 - KERALA HIGH COURT the respondent assessee filed a writ petition before the High Court with the prayer to give directions to the department to refund the due amount of Rs.6,62,275/- with interest and to recover the interest from officer who delayed payment of the amount and to take disciplinary action per the Department rules. The High Court directed the department to refund the excess fine and penalty consequent to the appellate order to the assessee within 10 days from the date of the judgment. The Department also accepted the refund within 10 days.

In spite of making refund the Department filed a review petition before the High Court with the submission that the excess fine and penalty consequent to the appellate order would be refunded on production of original documents such as importer’s bill of entry and duty pay TR6 challan which are mandatory documents do not find a place in the judgment. If the judgment is not review the department will be put to irreparable injury and hardship.

The Department submitted the following before the High Court in the review petition:

• In all cases of refund, original documents viz., importer’s copy of bill of entry and original duty paid TR 6 challan are insisted upon without which refund cannot be effected;
• An order rejecting the application for refund was issued to the petitioner as early as in 2009, which was returned with postal endorsement ‘addressee not known’;
• Since the assessee has not chosen to challenge the same, his remedy is lost forever;
• The original documents for refund are insisted for the following reasons:
  • To ensure identify of the person claiming the refund;
  • If refund is made without the documents, there is a chance of a duplicate claim for refund of the same amount;
  • Since such refunds are not covered by Section 27 of the Customs Act, the same can be made at any time and when refund is claimed after several years, for verifying previous refund, if any, original documents are mandatory.

 The assessee submitted that in view of the circulars issued by the Government of India, for effect refund as per the appellate order, even a refund application is not necessary for claiming refund of pre-deposit made during pendency of appeal, but only a simple letter from the person who has made such deposit, requesting return of the amount of such deposit along with an attested copy of TR6 challan evidencing payment of the amount of such deposit addressed to the concerned officer of customs will suffice for this purpose. This requirement has been fully complied with and therefore the assessee cannot be insist on any other document either original or copy.

The High Court considered the rival contentions and held as follows:

• The stand of the petitioner is totally hyper-technical and unreasonable;
• When an appellate authority allows an appeal filed against imposition of tax, duty, fine, penalty etc., it is the bounden duty of the assessing authority, as part of a democratic government, to refund the amounts covered by the orders of the appellate authority, when appeals are allowed fully or partially;
• The refund shall be done even without a formal request from the assessee;
• On a request made for refund by the assessee, the same shall be refunded immediately, failing which the assessing authority is bound to pay interest from the date when the refund became due;
• It is the duty of the Government officers to see that the image of the government before the citizens is clean and in accordance with basic principles of fair play;
• When an import is assessed to duty and penalty and fine are imposed, necessarily, the assessing authority maintains a file in relation to the same, which will contain all the documents in original relating to the levy;
• There is no difficulty for the assessing officers to decide the claim for refund based on those documents;
• When payment as per the adjudication order is known to the assessing authority, refund as per the appellate order is the duty of the assessing authority;
• The assessing authority cannot retain the amount due to the assessee, even for a moment, depriving the assessee of the use of his money unreasonably;
• Refunds are made by crossed cheques in the name of the importers and sent by registered post in the address of the assessee available in the file. As such there is no scope of any unauthorized person claiming and obtaining any refund or any duplication of the refund, unless the authority making the refund is negligent in his duties;
• Situation is the same even if the refund is after several years;
• Therefore the contentions of the department are only to find out some reason or other to deny the assessee the legitimate refund due in the writ petition;
• If an assessee has lost a document that does not mean that he should lose his right to claim legitimate refund due to him for that reason alone; it is the usual practice to obtain indemnity bond from the assessee in this regard. The Department must have been aware of that legal position

The High Court further held that the filing of the review petition itself is an abuse of the process of the court. The assessee was put to unnecessary harassment and hardship, by this unreasonable attitude of the department. Precious time of the court has also been wasted by this frivolous review petition. The High Court dismissed the review petition and directed the refund would also carry interest @ 6% p.a., from the date of appellate order till payment. The review petitioner shall also pay exemplary costs of Rs.25,000/- to the assessee within one month from the date of order. The interest and costs so paid shall not be debited to the exchequer and the same shall be recovered from the petitioner in the review petition and all officers responsible, if any, for not making the refund in time and for filing this unnecessary and frivolous review petition.