2024 (9) TMI 947 - HC - Customs

Refund of custom duty paid under protest with interest - prayer to direct the Custom Authorities to re-assess the Bills of Entry and process the refund or to direct respondent-State Government, Custom Department, for dispersal - HELD THAT - Having considered the facts of the case it is not in dispute that the petitioner imported four machines which are used for the World Bank project and accordingly, the State of Gujarat has issued project authority certificate. It is also not in dispute that the respondent authorities can amend the Bills of entry under sections 149 and 150 of the Act for the purpose of reassessment under sections 17 of the Act and the decision of the Hon ble Apex Court in case of ITC Limited 2019 (9) TMI 802 - SUPREME COURT is not applicable in the facts of the case as observed in case of Sony India Pvt Ltd 2023 (4) TMI 1086 - SC ORDER . On perusal of N/N. 84/97-Customs dated 11.11.1997, more particularly, clause (iii) thereof, the petitioner is entitled to the exemption from payment of custom duty on import of the machinery used for the World Bank Aided project. Certificate issued by the State of Gujarat is also clearly specifies that the machinery has been used by the project is it approved by the World bank and given to the petitioner for construction for the road. On perusal of the sections 149 of the Customs Act, the petitioner has obtained a certificate from the Government of Gujarat claiming duty benefit as per Notification No. 84/97 and the custom authorities therefore required to pass necessary reassessment of the bills granting exemption and therefore the custom duty paid under protest is liable to be refunded to the petitioner. In view of the above provision of the Act and more particularly clause (iii) of the Notification No. 84/97 coupled with the fact that the petitioner has also produced certificate issued by the Chartered Accountant that the petitioner has not passed on the benefit of custom duty to be paid under protest to anyone and therefore there is no unjust enrichment if the amount paid under protest is refunded to the petitioner. The respondent authorities are directed to reassess the Bills of Entry of the import of the four machines by the petitioner granting benefit of exemption under Notification No. 84/97 dated 11.01.1997 and custom duty paid under protest by the petitioner amounting to Rs. 86,00,068/- within a period of twelve weeks from today along with interest statutory interest, if payable in accordance with the provisions of the Act. Petition allowed.

Issues Involved:
1. Entitlement to refund of custom duty paid under protest.
2. Requirement of re-assessment of Bills of Entry for refund.
3. Delay in issuance of project authority certificate by the State Government.
4. Applicability of Notification No. 84/97-Customs dated 11.11.1997.
5. Compliance with provisions of Section 27 and Section 149 of the Customs Act, 1962.
6. Unjust enrichment and certification by Chartered Accountant.

Issue-wise Detailed Analysis:

1. Entitlement to Refund of Custom Duty Paid Under Protest:
The petitioner, a Private Limited Company engaged in road construction, imported four road construction machineries for a World Bank Aided project. The petitioner cleared the goods by paying custom duty under protest due to a delay in the issuance of the project authority certificate by the State of Gujarat. The petitioner applied for a refund of the custom duty paid under protest, supported by a Chartered Accountant's certificate confirming that the duty burden was not passed on to any other party. The court found that the petitioner is entitled to a refund as the delay in issuing the certificate was not attributable to the petitioner.

2. Requirement of Re-assessment of Bills of Entry for Refund:
The respondent authorities issued a deficiency memo requiring copies of re-assessed Bills of Entry for processing the refund. The petitioner contended that re-assessment was unnecessary. The court, however, held that re-assessment of the Bills of Entry is required under Section 149 of the Customs Act to process the refund, as per the standing order No. 27/2019 and the Supreme Court's decision in ITC Limited vs. Commissioner of Central Excise.

3. Delay in Issuance of Project Authority Certificate by the State Government:
The petitioner applied for the project authority certificate five months before importing the machinery, but the certificate was issued only after the goods were cleared. The court recognized that the delay was on the part of the State Government and not the petitioner. Therefore, the petitioner should not be deprived of the exemption from custom duty due to this delay.

4. Applicability of Notification No. 84/97-Customs dated 11.11.1997:
Notification No. 84/97 exempts goods imported for World Bank Aided projects from custom duty, provided a project authority certificate is produced. The court found that the petitioner met the conditions of the notification, as the machinery was used for a World Bank project approved by the Government of India, and the certificate was eventually issued by the State Government.

5. Compliance with Provisions of Section 27 and Section 149 of the Customs Act, 1962:
The court referred to the Supreme Court's decision in ITC Limited, which requires that a refund application under Section 27 cannot be granted without modifying the assessment order and re-determining the duty. The court directed the respondent authorities to reassess the Bills of Entry under Section 149 of the Customs Act based on the project authority certificate to process the refund.

6. Unjust Enrichment and Certification by Chartered Accountant:
The petitioner provided a Chartered Accountant's certificate stating that the custom duty paid under protest was not passed on to any other party, ensuring no unjust enrichment. The court accepted this certificate, concluding that there was no unjust enrichment and the petitioner was entitled to a refund.

Conclusion:
The court directed the respondent authorities to reassess the Bills of Entry for the import of the four machines, granting the benefit of exemption under Notification No. 84/97 and refund the custom duty paid under protest amounting to Rs. 86,00,068/- within twelve weeks, along with statutory interest if applicable. The rule was made absolute to this extent, with no order as to costs.

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