2019 (3) TMI 718 - AT - Customs

Rebate claim - DEPB Claim - contention of the respondents was that this amount has been considered as amount deposited during the investigation in the Show Cause Notice at various places and also been considered amount by the Assistant Commissioner (Refund) for appropriating the liability of Customs duty vide his Order dated 29-04-2016, hence they are eligible to get the refund of the said amount. Held that - The amount of ₹ 1,24,37,308/- has been considered as the amount deposited during investigation by the department in the Show Cause Notice dated 11.11.2004. It is also undisputed that the Assistant Commissioner (Refund) vide his Order dated 29.04.2016 has appropriated the duty amount of ₹ 59,23,397/- out of the said amount of ₹ 1,24,37,308/-. Thus, there is no hesitation in holding that the amount of ₹ 1,24,37,308/- surrendered by the respondents by way of DEPB/Rebate claim has been considered as an amount deposited during investigation by the department itself and there is no dispute over this fact. Also, refund claim cannot be denied merely on the ground that there is no provision under law. Once it is accepted that the benefits surrendered by the respondents are in the nature of amount deposited during investigations, then the refund of the excess amount has to be paid/refunded. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund claim based on amount deposited during investigation.
2. Appropriation of duty amount against deposited sum.
3. Rejection of refund claim by Assistant Commissioner.
4. Legal provision for refund in customs law.
5. Applicability of case laws on refund claims.

Analysis:

Issue 1: Refund claim based on amount deposited during investigation
The Commissioner of Customs (Export) filed an appeal against an order allowing the refund claim of the respondents, M/s SEL Manufacturing Company Ltd., for an amount deposited during a DRI investigation. The respondents had deposited a significant sum during the investigation, part of which was in cash/cheque/DD and part by surrendering DEPB/Excise rebate claims. The appeal raised concerns about the refund eligibility of the balance amount deposited during the investigation.

Issue 2: Appropriation of duty amount against deposited sum
The Assistant Commissioner (Refund) sanctioned a refund after adjusting interest and penalties from the cash portion of the deposited amount. The order specified the appropriation of the duty amount against the DEPB/Rebate amount. The Revenue accepted this order without further appeal, indicating acknowledgment of the appropriation of the deposited sum against the duty liability.

Issue 3: Rejection of refund claim by Assistant Commissioner
A second refund claim was filed by the respondents, seeking a refund of the balance amount deposited during the investigation. However, this claim was rejected by the Assistant Commissioner on the grounds of the absence of specific guidelines in customs law for such refunds in cash. This rejection led to the filing of an appeal by the respondents before the Commissioner of Customs (Appeals).

Issue 4: Legal provision for refund in customs law
The appeal highlighted the absence of guidelines from the Board or DEPB authorities regarding refunding the balance DEPB amount in cash to the assessee. The department argued that there was no legal provision for such refunds, citing previous judgments like Milton Laminate Ltd. and Commissioner of Central Excise, Indore v. Midland Plastics Ltd. to support their position.

Issue 5: Applicability of case laws on refund claims
The respondents argued that the benefits surrendered during the investigation were considered as amounts deposited by the department throughout the process. They cited various case laws, including Ratnamani Metals and Tubes Ltd. v. Union of India and Allen Diesels India (P) Ltd. v. Union of India, where courts allowed refund claims despite duty payment using DEPB. The respondents emphasized that the department regularly granted refunds in similar cases based on equitable principles, even in the absence of clear legal provisions.

The Tribunal dismissed the appeal by the Commissioner of Customs, upholding the refund claim of the respondents based on the amount deposited during the investigation. The decision emphasized that once benefits surrendered by the respondents were treated as deposited amounts during investigations, the refund of the excess sum had to be granted. The judgment also highlighted previous cases where courts allowed refunds despite duty payment using DEPB, reinforcing the principle of granting refunds based on equitable considerations.