2020 (11) TMI 389 - AT - Customs

Refund of Customs Duty - Duty paid under protest or not - section 27 of the Customs Act, 1962 - period April 2004 to June 2008 - rejection of refund on the ground that Appellant had not submitted the re-assessed copy of the Bills of Entry, in the absence of which the claim for refund was not maintainable - Time Limitation - whether filing of an appeal against an assessment order would itself mean that duty has been paid under protest? - HELD THAT - Fourth proviso to section 27(1) of the Customs Act was inserted with effect from May 11, 2007 by section 96 of the Finance Act, 2007 - Also, second proviso to section 11B of the Central Excise Act is identical to the second proviso to section 27 (1) of the Customs Act. Thus, it has to be held that if an appeal is filed against an assessment order, then duty that is paid has to be treated as duty paid under protest and in that case the limitation of six months for filing a refund claim from the date of payment of duty, would not apply. The issue that was required to be decided by the Commissioner (Appeals) was whether in terms of the second proviso to section 27 (1) of the Customs Act, the limitation of filing the refund application within six months from the date of payment of duty would be applicable if an appeal had been filed against the order of assessment as that may amount to payment of duty under protest. The Commissioner (Appeals) was not required to examine whether the fourth proviso to section 27 (1) of the Customs Act would apply or not. The fourth proviso to section 27 (1) of the Act deals with an entirely different situation where the duty becomes refundable as a consequence of a judgment, decree, order or direction of the appellate authority, the appellate tribunal or any court. In such a situation, the limitation of six months shall be computed from the date of such judgment, decree or direction - It needs to be noted that application filed by the Appellant for refund of duty was not as a consequence of any judgment, decree, order or direction of the appellate authority, appellate tribunal or any court. The Tribunal in the present case, while remanding the matter to the Commissioner (Appeals) had examined the second proviso as also the fourth proviso to section 27(1) of the Customs Act and had distinguished the two. The Tribunal held that it is the second proviso to section 27 (1) of the Customs Act that would be applicable and not the fourth proviso and so all that the Commissioner (Appeals) was required to decide was whether duty had been paid under protest or not since an appeal against the assessment order had been filed. The Commissioner (Appeals) clearly misunderstood the direction issued by the Tribunal and based his order on the fourth proviso to section 27 (1) of the Act - it is not possible to sustain the order passed by the Assistant Commissioner (Appeals). Application allowed.

Summary

Issues Involved:
1. Whether the refund claim is barred by limitation under Section 27 of the Customs Act.
2. Whether the payment of duty can be considered as made under protest due to the filing of an appeal against the assessment order.
3. Applicability of the second and fourth provisos to Section 27(1) of the Customs Act.

Issue-wise Detailed Analysis:

1. Whether the refund claim is barred by limitation under Section 27 of the Customs Act:
The Appellant's refund claim was initially rejected on the grounds of limitation, as per Section 27(1) of the Customs Act, which mandates that a refund application must be filed within six months from the date of payment of duty. The Appellant argued that this limitation does not apply as the duty was paid under protest. The Tribunal had previously remanded the matter to the Adjudicating Authority to determine whether the duty was indeed paid under protest, which would make the limitation period inapplicable under the second proviso to Section 27(1).

2. Whether the payment of duty can be considered as made under protest due to the filing of an appeal against the assessment order:
The Appellant contended that the filing of an appeal against the assessment order itself implies that the duty was paid under protest. This argument was supported by several judicial precedents, including the Constitution Bench judgment of the Supreme Court in Mafatlal Industries Ltd., which held that contesting the liability by way of appeal naturally implies payment under protest. The Tribunal and various High Courts, including the Punjab and Haryana High Court in M/s Ind Swift Lands Ltd., have upheld that filing an appeal against an assessment order amounts to payment under protest, thereby exempting the refund claim from the limitation period.

3. Applicability of the second and fourth provisos to Section 27(1) of the Customs Act:
The second proviso to Section 27(1) states that the limitation of six months shall not apply where any duty has been paid under protest. The fourth proviso, inserted with effect from May 11, 2007, provides that where the duty becomes refundable as a consequence of a judgment, decree, order, or direction of the appellate authority, the limitation shall be computed from the date of such judgment, decree, order, or direction. The Tribunal clarified that the Appellant's refund claim did not arise as a consequence of any such order but was based on the contention that the duty was paid under protest. The Commissioner (Appeals) erred by focusing on the fourth proviso instead of the second proviso, which was the relevant provision for determining the applicability of the limitation period in this case.

Conclusion:
The Tribunal concluded that the filing of an appeal against the assessment order should be deemed as payment of duty under protest, making the six-month limitation period inapplicable under the second proviso to Section 27(1) of the Customs Act. Consequently, the order passed by the Commissioner (Appeals) was set aside, and the Appellant's refund claim was allowed with all consequential benefits.