2018 (1) TMI 172 - AT - Customs

Refund claim - forced recovery - amount paid by the respondent during the pendency of investigation - Held that - the First Appellate Authority in the impugned order has held that, on the date of filing of the refund as filed by the respondent, there was no duty liability assessed and hence the refund claim needs to be allowed and subsequent initiation of SCN proceedings and determination of duty cannot validate illegal recovery made during the investigation. Appeal dismissed - decided against appellant.

Summary

Issues:
Refund claim during investigation proceedings.

Analysis:
The appeal before the Appellate Tribunal CESTAT Hyderabad concerned the refund claim filed by the respondent regarding the amount paid under protest during the investigation. The respondent had imported coal and claimed exemption in Customs Duty under Notification No.21/2002. Following an investigation in May 2010, the respondent was directed to deposit an amount, which was done under protest. Subsequently, a refund claim was filed on 22.03.2011, but it was returned as premature by the Adjudicating Authority. An appeal was made to the First Appellate Authority, which directed the Adjudicating Authority to pass an appropriate order following principles of natural justice. The Adjudicating Authority rejected the refund claim on the grounds that the amount had already been adjusted against duty liability. The First Appellate Authority set aside the Order-in-Original in response to an appeal against this decision.

The Departmental Representative argued that the amounts deposited by the respondent had already been appropriated in an adjudication proceeding, and the reliance on certain case laws was incorrect. However, the Appellate Tribunal, after considering submissions and records, found that at the time of filing the refund claim, there was no duty liability assessed. The Tribunal agreed with the First Appellate Authority that the collection of duty during the investigation was not authorized by law and was, therefore, refundable. The subsequent initiation of show cause notice proceedings and determination of duty could not validate the earlier illegal recovery. The Tribunal cited relevant case laws to support this position.

The Appellate Tribunal upheld the decision of the First Appellate Authority, stating that the refund claim should be allowed as there was no duty liability assessed at the time of recovery during the investigation. The subsequent determination of duty under the adjudication order would be recovered as per the law, but the duty illegally collected had to be refunded to the appellant. The Tribunal referred to judgments from various High Courts to support its conclusion. It found that the reliance on the judgments by the First Appellate Authority was correct, and the appeal was rejected as the impugned order was deemed correct and legal without any infirmity.