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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 ..... -2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. Satish Kumar, sr. standing counsel For Respondent: Mr. M P Devnath, Mr. Abhishek Anand and Mr. Aditya Bhattacharya, Advs. SANJIV KHANNA, J: (ORAL) CM 19084/2011 Delay of three days in filing of the present appeal is condoned. Application is disposed of. CUSAA 43/2011 Having heard the counsel for the parties following substantial question of law is framed : Whether Customs, Excise and Service Tax Appellate Tribunal is right in holding that refund under Section 18 of the Customs Act should have been made without any application for refund and that Section 18 was applicable and Section 27 of the Customs Act, 1962 was not applicable? 2. With the consent of the counsel for the parties, the matter is taken up for hearing and is being decided by the present order. 3. The respondent imported petroleum crude oil by two bill of entries dated 24.8.1998 and 2.2.1999. The said bill of entries 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 - (a) where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or (b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or (c) where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty, the proper officer may direct that the duty livable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, is that Section 18 is not applicable but Section 27 of Act is applicable. It is further contended that according to sub-section (2) of Section 27, the refund can be paid to the importer only if it is shown that he had borne the duty and had not passed on the incidence of the duty to any other person. 8. Section 27 of the Act reads as under : 27. CLAIM FOR REFUND OF DUTY. - (1) Any person claiming refund of any duty and interest, if any, paid on such duty - (i) paid by him in pursuance of an order of assessment; or (ii) borne by him, may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Customs (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, before the expiry of one year; (b) in any other case, before the expiry of six months, from the date of payment of duty and interest, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, be paid to the applicant, if such amount is relatable to - (a) the duty and interest, if any, paid on such duty paid by the importer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (b) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use; (c) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty 61 ] to any other person; (d) the export duty as specified in section 26; (e) drawback of duty payable under sections 74 and 75; (f) the duty and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government 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, ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Act. Explanation II to Section 27 of the Customs Act (Explanation 1 prior to 1-8-1998) provides that to obtain refund of any duty paid provisionally under Section 18, an application for refund must be made within the period of limitation prescribed therein. The limitation prescribed under Section 27 of the Customs Act requiring filing of an application for refund of duty arising on finalisation of the provisional assessment in the case of import made by any individual for his personal use or by Government or by any educational research or charitable institution or hospital, is, before the expiry of one year and in any other case before the expiry of six months from the date of adjustment of duty after the final assessment. In other words, the refund of duty arising on finalisation of the provisional assessment is governed by the limitation prescribed under Section 27 of the Customs Act. Therefore, even though the Petitioners are entitled to the refund on finalisation 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of Revenue that such amendment has to be understood as clarificatory in nature. This is more so, when one reads the amendments made in 1998 and the amendment made in Rule 9B of the Central Excise Rules in 1999 considering the pronouncement of the Apex Court as to the distinction between making of a refund and claiming of a refund; the amendment cannot be considered to be retrospective in nature; and cannot be made applicable to pending proceedings. 19. This can be considered from a slightly different angle. While introducing the Taxation Laws (Amendment) Bill, 2005 (Bill No. 74 of 2005) the Notes on Clauses in relation to Section 18 of the Act indicate that Sub-sections (3), (4) and (5) to Section 18 of the Act, have been inserted to provide for a mechanism to regularise the payments of duty short levied and interest thereon and duties that are to be refunded on finalization of provisional assessment and in this context in the report of the Standing Committee 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 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed that they did not communicate the two final orders dated 21.6.1999 and 15.6.1999 and therefore, it is not denied that the application if made under Section 27 would not be barred by limitation. The emphasis and issue raised is whether sub-Section (2) to Section 27 i.e. the clause relating to unjust enrichment would be applicable in the present case. Sub-Section (2) to Section 27 was inserted/incorporated w.e.f. 23.12.1991 by Section 2 of the Customs (Amendment) Act, 1991. The contention of the appellant is that the respondent-assessee must therefore satisfy the conditions stipulated in sub-Section (2) to Section 27 of the Act and accordingly, if it satisfies the requirements and can establish that the incidence of duty was not passed on, they would be entitled to refund under the said Section. Otherwise, the amount of duty refundable has to be transferred to the Consumer Welfare Fund. This is the precise question and the issue which is being determined and decided. 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -rule (5) of Rule 9B by adding a proviso thereto. The effect of the proviso is that even after finalisation of the provisional assessment under Rule 9B (5), if it is found that an assesses is entitled to refund, such refund shall not be made to him except in accordance with the procedure established under Sub-section (2) of Section 11B of the Act. 4. There is no dispute that the refund claim in this case was made much prior to the addition of the proviso in Sub-rule (5) of Rule 9B. On the date on which the refund claim was made, the law applicable was the law as declared by this Court in Mafatlal Industries Ltd. (supra) which we have reproduced above. However, it is contended by the learned counsel Shri Verma for the department that the claim of refund would be governed by the proviso introduced in Sub-rule (5) of Rule 9B, and that as a consequence, the restrictions in Section 11A and Section 11B with regard to the procedure for refund would apply to the case of the 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 104 of the said judgment does not deal with payment under protest. In the light of what is stated herein, we may now consider the judgment of this Court in the case Sinkhai Synthetics ' Chemicals Pvt. Ltd. (supra). In that matter, the assessee was a manufacturer. The assessee claimed exemption which was denied by the Department. The assessee went in appeal to CEGAT. Pending appeal, assessee paid excise duty under protest. The assessee succeeded before the CEGAT and claimed refund on 17-1-1991. Refund was denied by the Department. Therefore, it was a case of payment of duty under protest. However, in the said decision, this Court applied Para 104 of the judgment of the Constitution Bench in the case of Mafatlal Industries Ltd. (supra), which with respect, had no application. As stated above. Para 104 of the judgment in the case of Mafatlal Industries Ltd. (supra) dealt with refund consequent upon finalisation of provisional assessment. Para 104 does not deal with 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 18 of the Customs Act which is similar to Rule 9B of the Central Excise Rules. A two-Judge Bench of this Court in Commissioner of Central Excise, Mumbai v. Allied Photographics India Ltd. [2004 (163) E.L.T. 401 (S.C.) = 2004 (4) SCC 55], noticing the inconsistency, doubted the correctness of two decisions rendered by three-Judge Bench of this Court in, i.e. (i) Sinkhai Synthetics Chemicals (P) Ltd. v. Commissioner of Central Excise [2002 (9) SCC 416 = 2002 (143) E.L.T. 17] and (ii) Commissioner of Central Excise v. TVS Suzuki Ltd. [2003 (7) SCC 24 = 2003 (156) E.L.T. 161] as contrasted to the Constitution Bench decision in Mafatlal Industries Ltd. v. Union of India [1997 (89) E.L.T. 247 (S.C) = 1997 (5) SCC 536]. The three-Judge Bench which considered the correctness of the aforesaid two decisions (of three-Judge Bench) has in Commissioner of Central Excise, Mumbai-II v. Allied Photographics India Ltd. [2004 (166) E.L.T. 3 (S.C.) = 2004 (4) SCC 34] held that 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be returned and if the Assessee seeks to claim Rs. 10 also (Rs. 70- Rs. 60) as refund, then Explanation II would apply and the said claim is to be preferred within six months from the date of adjustment of duty. This position is precisely dealt with and explained in the second portion of paragraph No. 104 of Judgment in case of Mafatlal Industries (supra). 20. The two situations are relevant and important. In the first situation the assessee has paid provisional duty which gets reduced on final assessment. The assessee, therefore, becomes entitled to refund which is payable in terms of Rule 9B of the Excise Act, 1944 or Section 18 of the Act. For refund on this account, no application is required to be filed under Section 27 of the Act and therefore, sub-Section (2) is not applicable. In the second situation, the assessee becomes entitled to additional refund on account of appellate orders or orders passed by a court. In this situation, the assessee 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 3r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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