WITHOUT REASSESSENT ORDER REFUND COULD NOT BE CLAIMED

[Mr. M. GOVINDARAJAN]

Section 2(2) of the Customs Act defines the term assessment. According to this section the term ‘assessment’ includes provisional assessment, self-assessment, reassessment and any order of assessment in which the duty assessed is NIL. Section 27 of the Customs Act entitles an assessee to claim refund of any duty paid by him in pursuance of an order of assessment.  According to Section 2 (2) assessment includes reassessment. The Supreme Court in ‘Priya Blue Industries Limited V. Commissioner’ – 2004 (9) TMI 105 - SUPREME COURT OF INDIA held that the assessee is not entitled to claim refund if the order of assessment is under challenge.  The said judgment clearly indicates that without an assessment order or reassessment order the assessee cannot claim refund.

The 4^th proviso to Section 27 of the Customs Act indicates the limitation period for claim of such refund.  According to this proviso, where the duty becomes refundable as a consequence of a judgment, decree, order or direction of the appellate authority, appellate tribunal or any court, the limitation of one year or six months as the case may be shall be computed from the date of such judgment.

In ‘Sanjivani Non Ferrous Trading Private Limited V. Commissioner of Customs and Central Excise, Ghaziabad’ – 2012 2840 ELT 559 (Tri. Del) the appellant imported aluminium scrap and filed a bill of entry on 05.01.20120.  The appellant paid the customs duty of Rs.2,33,713/- on 06.01.2010. The appellant later discovered that he has paid the duty in excess to the Department. The actual duty payable is Rs.1,54,153/-. Thus he paid duty in excess of Rs.79,560/- Since he is entitled to claim the refund he wrote a letter dated 15.06.2010 to the Assistant Commissioner of Customs, Ghaziabad to reassess the bill of entry.  The Assistant Commissioner passed the re-assessment order on 13.07.2010. The Assistant Commissioner accepted the stand taken by the appellant and correct the duty required to be paid by the appellant as Rs.1,54,153/-

The appellant, therefore, filed an application for refund of Rs.79,560/- with the Department. The Assistant Commissioner rejected the claim of refund holding that the refund application was barred by limitation. He observed that the duty was paid on 06.01.2010 and the refund was claimed on 30.07.2010 i.e., after six months which is the limitation period for filing refund claim. The first appellant authority, on the file of appeal by the appellant upheld the order of Assistant Commissioner. Therefore the appellant took the case to the Tribunal. taxmanagementindia.com

Before the Tribunal the appellant contended that the refund in question has arisen to them as a consequence of reassessment of Bill of Entry and as such, the period of limitation would start from the date of reassessment order i.e., 13.07.2010.

The Tribunal found that the facts are not in dispute by both parties. The duty was admittedly paid on 06.01.2010 on the basis of assessed Bill of Entry.  The letter for reassessment was filed by the appellant on 15.06.2010 i.e., within six months from the date of deposit of duty. 

The Tribunal held that if the Assistant Commissioner would have reassessed the Bill of Entry within a short period i.e., before 06.07.2010, when the limitation of 6 months expired, the appellant would have filed the refund claim accordingly. It is a fact that without reassessment order refund could not have been claimed by the appellant. As soon as the reassessment order was passed on 13.07.2010 the appellant filed refund claim on 30.07.2010 i.e., within a period of six months from the date of reassessment order. The Tribunal further held that the Revenue could not take the benefit of its own action, in late passing of reassessment order and then rejecting the refund claim on limitation.  Admittedly the appellant could not have filed a refund claim before passing of assessment order so as to escape period of limitation.

The Tribunal further held that the refund of duty arisen as a result of reassessment has to be treated as having been arisen in pursuance of order of assessment. As such the duty sought to be refunded is on account of reassessment order. The claim having been filed within a period of one month from the order of reassessment, the Tribunal was of the view that the refund claim could not be held to be barred by limitation in terms of provisions of Section 27.  The Tribunal set as the order and allowed the appeal filed by the appellant.