2020 (4) TMI 245 - AT - Customs

Refund of excess customs duty paid - refund rejected on the ground that before filing a refund claim, the appellant should have first challenged the assessment of the bills of entry which they did not do - whether the appellant is entitled to refund of excess duty paid when the bills of entry are finalised or otherwise? - HELD THAT - This issue has been a point of contention and Hon ble Apex Court in the case of Flock India Pvt Ltd., 2000 (8) TMI 88 - SUPREME COURT and Priya Blue Industries Ltd., 2003 (11) TMI 600 - SC ORDER held that the assessment order has to be first challenged before a refund claim can be filed under Section 27. The reason for this is the Officer sanctioning the refund cannot sit in judgment on the assessment done by the Assessing Officer. An assessment is a quasi judicial function exercised by the Assessing Officer against which an appeal lies before the Commissioner (Appeals) and not before the Officer sanctioning the refund. Sanction of refund is a mere mechanical process of seeing if duty was paid in excess and refunding the same. No refund can be claimed in respect of any assessment including self assessment unless the assessment itself is challenged and set aside by the appellate authority - Appeal dismissed - decided against appellant.

Issues:
1. Entitlement to refund of excess duty paid without challenging assessment order.
2. Interpretation of Section 27 for filing refund claims.
3. Impact of judgments on refund claims without challenging assessment orders.
4. Changes in assessment process under Customs Act.
5. Applicability of recent Larger Bench judgment on refund claims.

Analysis:

Issue 1: Entitlement to refund of excess duty paid without challenging assessment order
The case involved a dispute regarding the inclusion of certain charges in the assessable value of imported goods. The appellant contended that these charges should not be included based on a judgment of the Hon'ble Apex Court. However, the refund claims were rejected by the adjudicating authority and the First Appellate Authority on the grounds that the appellant did not challenge the assessment of the bills of entry before filing the refund claims. The central question was whether an application for refund of excess duty paid could be made without challenging the assessment order itself. The Hon'ble Apex Court's precedent in Flock India Pvt Ltd. and Priya Blue Industries Ltd. held that the assessment order must be challenged before filing a refund claim.

Issue 2: Interpretation of Section 27 for filing refund claims
The tribunal deliberated on the interpretation of Section 27 of the Customs Act, 1962, which governs the filing of refund claims for excess duty paid. The tribunal considered whether a refund claim could be made directly for excess duty paid without challenging the assessment order. The tribunal analyzed the legal requirement of challenging the assessment order before seeking a refund, as established by previous judgments of the Hon'ble Apex Court. The decision highlighted the quasi-judicial nature of assessment functions and the need for adherence to procedural requirements before claiming a refund under Section 27.

Issue 3: Impact of judgments on refund claims without challenging assessment orders
The tribunal discussed the impact of previous judgments, such as Flock India Pvt Ltd. and Priya Blue Industries Ltd., on refund claims where the assessment order was not challenged. It emphasized the legal principle that challenging the assessment order is a prerequisite for filing a refund claim. The tribunal noted that the sanctioning of refunds is a mechanical process based on the correctness of the assessment done by the Assessing Officer, which can only be challenged through the appropriate appellate channels.

Issue 4: Changes in assessment process under Customs Act
The tribunal highlighted changes in the assessment process under the Customs Act, particularly concerning self-assessment by importers and the introduction of a risk management system in the customs EDI network. The evolution of the assessment process, including the shift towards self-assessment and re-assessment options for officers, was considered in the context of filing refund claims without challenging assessment orders. The tribunal referenced judgments from the Hon'ble High Court of Delhi that addressed scenarios where goods were cleared automatically without formal assessment by officers.

Issue 5: Applicability of recent Larger Bench judgment on refund claims
The tribunal referenced a recent Larger Bench judgment of the Hon'ble Apex Court in the case of ITC Ltd., which clarified that no refund could be claimed without challenging the assessment itself. The tribunal applied this recent legal precedent to the present case, affirming that the refund claims were correctly rejected as the assessment orders were not challenged by the appellant. The decision aligned with the legal principle established by the Larger Bench judgment, emphasizing the necessity of challenging assessment orders before seeking refunds.

In conclusion, the tribunal dismissed the appeals and upheld the impugned orders based on the legal requirement of challenging assessment orders before filing refund claims, as per the recent legal precedent set by the Larger Bench of the Hon'ble Apex Court.

← Previous Next →