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TMI Blog2012 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... s were provisionally assessed under the Customs Act, 1962 (Act, for short) as the documents regarding FOB value and the freight payable for the crude oil were not available. At the time of provisional assessment, the respondent-assessee had deposited Rs.6,42,02,664/- and Rs.10,23,71,807/-. 4. The two bill of entries mentioned above were finally assessed on 21.6.1999 and 15.6.1999 by the Appellate Commissioner of Customs at Vadinar Port. Final duty assessed was Rs.5,71,84,514/- and Rs.10,12,97,546/- respectively, which entitled the respondent-assessee to refund of Rs.70,18,150/- and Rs.10,74,261/- (total Rs.80,92,411/-). 5. On 21.1.2004, the respondent-assessee filed an application in Form No.22 seeking refund of Rs.80,92,411/-. The application was rejected by the Assistant Commissioner (Refunds) vide order dated 18.3.2004 on the ground that it had been made after four years and seven months and was clearly beyond period of 6 months stipulated under Section 27(1)(b) of the Act. The contention of the respondent-assessee that they had not received the final assessment orders and therefore, they could not file an application for refund, was rejected by the Assistant Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiency, if any, between the duty finally assessed and the duty provisionally assessed. (2) When the duty livable on such goods is assessed finally in accordance with the provisions of this Act, then - (a) in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against 1the duty finally assessed and if the amount so paid falls short of, or is in excess of the duty finally assessed, the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be; (b) in the case of warehoused goods, the proper officer may, where the duty finally assessed is in excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty. (3) The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order under sub-section (2), at the rate fixed by the Central Government under section 28AB from the first day of the month in which the duty is provisionally assessed till the date of payment thereof. (4) Subject to sub-section (5), if any refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest, if any, paid on such duty, in such form and manner as may be specified in the regulations made in this behalf and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 28C) as the applicant may furnish to establish that the amount of duty and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section and the same shall be dealt with in accordance with the provisions of sub-section (2) : Provided further that the limitation of one year or six months, as the case may be, shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Provided also that in the case of goods which are exempt from payment Of duty by a special order issued under sub-section (2) of section 25, the lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person. (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal [, the National Tax Tribunal]or any Court or in any other provision of this Act or the regulations made there under or any other law for the time being in force, no refund shall be made except as provided in sub-section (2). (4) Every notification under clause (f) of the first proviso to sub-section (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessment under Section 18, to obtain that refund, the Petitioners are required to make an application within the period of limitation prescribed under Section 27 of the Customs Act. That is the scheme of the Customs Act. If the Customs authorities were under an obligation to refund the amount due under Section 18 of the Act then the Explanation II to Section 27becomes redundant or nugatory. Therefore, the construction put forth by the Petitioners which runs counter to the express provision of the statute cannot be accepted. In fact, the Apex Court in the case of Mafatlal Industries Ltd. (supra) at Para 99 of its judgment has held that all refund claims except in the case of unconstitutional levy must be filed and adjudicated under Section 27 of the Customs Act. Later on it is held by the Apex Court that even the unconstitutional levy is governed by the principles of unjust enrichment. Therefore, the contention of the Petitioners that Section 27 does not apply to refund due under Section 18 and the Customs authorities are obliged to refund the amount due under Section 18 without the application of Section 27cannot be accepted." According to the aforesaid observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttee on Finance it has specifically been noted that this amendment became necessary because Section 18 of the Act which provides for provisional assessment of duty presently (i.e.upto 12th July, 2006) does not provide for various issues arising from the finalization of provisional assessment. Thus it becomes apparent that the amendment in question is substantive in nature when one finds that various provisions have been inserted which were not forming part of the original Section 18 of the Act as it stood upto 12th July, 2006. It is not possible to state that the provisions for payment of interest on duty short levied or entitlement to interest on duty paid in excess of the finally assessed duty can be considered to be clarificatory provisions and in the same vein the newly inserted Sub-section (5) deserves consideration. Thus in effect upto 12th July, 2006 no provision existed in Section 18 of the Act which would permit Revenue to invoke principles of unjust enrichment in relation to duty paid in excess, found to be so, upon finalization of provisional assessment under Section 18 of the Act. 20. Hence, the reference to provisions of Section 27 of the Act which generally deals with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. The question of unjust enrichment and the constitutional validity of the amendments made in 1991 including insertion of sub-Section (2) to Section 27 were made subject matter of challenge in the Supreme Court and were decided in the case of Mafatlal Industries Ltd. Vs. UOI 1997 (5) SCC 536. Explaining analogous provisions in the Central Excise Act/Rules, it was held as under : 104. Rule 9-B provides for provisional assessment in situations specified in Clauses (a) (b) and (c) of Sub-rule (1). The goods provisionally assessed under Sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that "when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be". Any recoveries or refunds consequent upon the adjustment under Sub-rule (5) of Rule 9-B will not be governed by Section 11-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. The same question came up for consideration of this Court in Sinkhai Synthetics & Chemicals Pvt. Ltd. v. C.C.E., Aurangabad 2002ECR797(SC) . This Court took the view that the case would be governed by the rule laid down in Mafatlal Industries Ltd. (supra) This view has been reiterated in a subsequent judgment of this Court in C.A. No. 2533 of 2001 (Commissioner of Central Excise, Meerut v. Star Paper Mills Limited)upholding the view of the tribunal that the refund claim of the appellant before the court was justified. 5. Shri Verma fairly concedes that the proviso introduced in Sub-rule (5) of Rule 9B cannot be said to be retrospective in operation. He, however, contends that on the date on which the proviso was brought into force, i.e. 25.6.1999, the refund claim was still pending with the departmental authorities and, therefore, it had to be adjudicated in accordance with the law as it became enforceable from 25.6.1999. In our view, this contention cannot be accepted. Merely because the departmental authorities took a long time to process the application for refund, the right of the appellant docs not get defeated by the subsequent amendment made in Sub-rule (5) of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of duty paid under protest. As stated above, there is a difference under the Act between payment of duty under protest on one hand and refund consequent upon finalisation of provisional assessment on the other hand. This distinction is missed out, with respect, by the judgment of this Court in the case of Mafatlal Industries Ltd. (supra). We may also point out that the judgment in the case of Sinkhai Synthetics & Chemicals Pvt. Ltd. (supra) is based on the concession made by the Counsel appearing on behalf of the Department. That judgment is, therefore, per incuriam. Learned Counsel for the respondent herein placed reliance on the judgment of this Court in the case of TVS Suzuki Ltd. (supra). In that case, application for refund was filed. This was on completion of final assessment. On 9-7-1996, the Department issued a show cause notice as to why the refund claim should not be rejected for non-compliance of Section 11B. By order dated 17-7- 1996, the refund claim was rejected on the ground that it was beyond limitation. On appeal, the Commissioner (Appeals) observed that the bar of unjust enrichment was not applicable as the assessee claimed refund consequent upon final ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment in Sinkhai Synthetics's case (supra) was per incuriam [para 14 at page 52] and approved the decision in the later case, i.e. TVS Suziuki's case (supra). The three-Judge Bench has also taken the same view, as was taken by the Tribunal, to the effect that the doctrine of unjust enrichment is not applicable to the provisional assessment even after the finalization thereof. The point in issue in the present case is, thus, squarely covered by the three-Judge Bench decision in Allied Photographics' case [2004 (166) E.L.T. 3 (S.C.) = 2004 (4) SCC 34]. In view of this, the appeals are dismissed and the order passed by the Tribunal is affirmed. No costs." (emphasis supplied) 18. We may notice here that Gujarat High Court in the case of Hindalco Industries (supra) has specifically referred to decision in the case of Allied Photographic India Ltd. (supra) but the said case has not been noticed by the Bombay High Court in the case of Bussa Overseas and Properties Pvt. Ltd. (supra). The decision of the Gujarat High Court in the case of Hindalco Industries Ltd. (supra) has been followed by Orissa High Court in CCE, C. & ST, Bhubaneshwar - I Vs. Paradeep Phosphates Ltd. 2010 (252) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is under an obligation to file an application under Section 27 of the Act, the limitation period accordingly applies and doctrine of unjust enrichment is also applicable. Explanation II to Section 27 of the Act deals with the 3rd category of situations. Such situations may occur after the passing of the final assessment, on account of rectification under Section 154 of the Act or because of any other reason, as a result of which the final order suffers an amendment or a change and some amount becomes refundable. As far as Section 18 of the Act is concerned, when an amount becomes refundable after a final order is passed, the same has to be refunded immediately and for this purpose the assessee is not required to move an application under Section 27 and accordingly sub-section (2) to Section 27 would not apply. It is in this situation that the legislature has intervened and has now inserted sub-sections (3), (4) and (5) to Section 18 w.e.f. 13.7.2006. These insertions obviously are not applicable to the case in hand as they do not have retrospective effect. It was so held in TVS Suzuki Ltd. (supra) when similar amendments were made in Rule 9B of the Rules passed under the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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