2022 (11) TMI 440 - AT - Customs

Refund of excess duty paid - Valuation of imported goods - 100% Knitted Polyester Fabrics - rejection of declared value - enhancement of the value on the basis of NIDB data - time limitation - refund also rejected on the ground of being pre-mature and on the ground of being incomplete - HELD THAT - On perusal of Section 27 as it stood prior to the amendment, it can be seen that the second proviso states that one year / 6 months, as the case may be, do not apply when duty is paid under protest. The fourth proviso to sub-section (1) states that when duty becomes refundable as a consequence of judgment, decree, order or direction of the court, the limitation of one year or 6 months, as the case may be, shall be computed from the date of such judgement, decree or order. Both being proviso, it does give rise to some confusion. However, after the amendment to Section 27 by adding sub-section (1B) separately and using the phrase Save as otherwise provided in this section , the intention of the legislature to put the situation when duty has been paid under protest under a different category where no limitation applies is very much clear - In the case on hand, although refund claim is made out of a consequence of judgement, decree or order, the appellant having paid duty under protest, the limitation of one year envisaged in Section 27 will not apply. The issue of time bar is answered in favour of the appellant. Rejection of refund on the ground of being premature - It is the case of the Department that the claim is made without re-assessment / final assessment of the Bills of Entry - HELD THAT - The view taken by the department that the refund claim is time-barred as well as premature appears to be self-contradictory. Further, it is the duty of the department to conduct reassessment in consequence to the orders passed by the Tribunal which has set aside the enhancement of the value of imported goods. Undisputedly, the department has accepted the order passed by the Tribunal and there is no appeal filed against the said order - The appellant was thus denied relief before a higher forum by contending that Department intends to file an appeal. Even after accepting the final order of Tribunal, they have not passed an order of final reassessment. The inaction on the side of the department cannot be a ground to reject the refund claim as premature. The other reason for rejection of the refund is that refund claim is incomplete and not supported by necessary documents - principles of unjust enrichment - HELD THAT - The matter having reached upto the Tribunal and also the Hon ble High Court, it can be safely inferred that the department will not find it difficult to verify the copies of Bills of Entry produced by the appellant. The appellant having produced the Chartered Accountant certificate only before the Commissioner (Appeals), the original authority has not been able to verify the issue of unjust enrichment - the matter requires to be remanded to the original authority. The rejection of refund claim on the ground of time-bar and premature is set aside. The department is directed to complete the re-assessment and then process the refund claim. The appellant shall be given an opportunity to furnish documents to prove that refund is not hit by unjust enrichment - appeal allowed in part and part matter on remand.

Summary

Issues Involved:

1. Time-barred refund claim.
2. Premature refund claim.
3. Incomplete refund claim due to lack of necessary documents.

Issue-wise Detailed Analysis:

1. Time-barred Refund Claim:

The primary issue was whether the refund claim filed by the appellant was time-barred under Section 27 of the Customs Act, 1962. The department argued that the refund claim filed on 07.08.2019 was beyond one year from the date of the CESTAT order (01.03.2018), making it time-barred. However, the appellant contended that the limitation of one year does not apply as the duty was paid under protest, invoking the second proviso to sub-section (1) of Section 27, which states that the limitation of one year shall not apply where any duty or interest has been paid under protest.

The Tribunal agreed with the appellant, emphasizing that the phrase "Save as otherwise provided in this section" in sub-section (1B) of Section 27 indicates that specific provisions within the section, such as the second proviso, take precedence. Therefore, the limitation of one year does not apply when duty is paid under protest. The Tribunal cited various legal precedents to support this interpretation, including cases that established duties paid under protest are not subject to the one-year limitation.

2. Premature Refund Claim:

The department also rejected the refund claim on the grounds that it was premature since the Bills of Entry had not been reassessed following the Tribunal's order. The appellant argued that they had requested reassessment multiple times and even approached the High Court for directions, but the department failed to act.

The Tribunal found the department's stance contradictory, as it simultaneously claimed the refund was time-barred and premature. The Tribunal held that it was the department's duty to conduct reassessment following the Tribunal's order, and the appellant should not be penalized for the department's inaction. The Tribunal directed the department to complete the reassessment and process the refund claim accordingly.

3. Incomplete Refund Claim Due to Lack of Necessary Documents:

The department further rejected the refund claim for being incomplete, citing the absence of original Bills of Entry and a Chartered Accountant certificate to rule out unjust enrichment. The appellant asserted that they had submitted the necessary documents, including the Chartered Accountant certificate, before the Commissioner (Appeals) and had previously provided the original Bills of Entry for a Special Additional Duty refund.

The Tribunal acknowledged the appellant's submissions and noted that the matter had reached the Tribunal and the High Court, implying that the department could verify the documents. However, since the original authority had not verified the Chartered Accountant certificate, the Tribunal remanded the matter to the original authority to complete this verification.

Conclusion:

The Tribunal set aside the rejection of the refund claim on the grounds of being time-barred and premature. It directed the department to complete the reassessment and process the refund claim, allowing the appellant to furnish necessary documents to prove that the refund is not hit by unjust enrichment. The Tribunal ordered the department to process the refund within four months from the date of the order. The appeal was partly allowed and partly remanded for further action.