Custom, Excise & Service Tax Tribunal
M/S. Spicer India Limited vs Commissioner Of Customs, Chennai-Iii on 29 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/68/2005 (Arising out of Order-in-Appeal No. 124/04 dt. 6.10.2004 passed by the Commissioner (Appeals) Chennai ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
======================================================
M/s. Spicer India Limited
:
Appellant
VS
Commissioner of Customs, Chennai-III
:
Respondent
Appearance
Shri Narendra Dave, C.A. for Appellant
Shri D.K. Sinha, Asstt. Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 29/03/2016
Date of decision: 29/03/2016
ORDER NO.
Per: Ramesh Nair
The appeal is directed against Order-in-Appeal No. 124/04 dt.6.10.2004 passed by Commissioner of Central Excise (Appeals) Chennai whereby the Ld. Commissioner upholding the Order-in-Original No. 12/04 dt. 17.6.2004, rejected the appeal of the appellant.
2. The fact of the case is that the imports of the appellant were subjected to provisional assessment by loading the value by 2% to 5 % by Bombay Customs which was complied with by the appellants as revenue deposit. The Bombay Customs vide Order No.S/5-SVB-78-97/VB dt. 30.5.1997 decided that no loading was warranted. The issue of valuation was finally settled by the Commissioner (Appeals) in the appeal filed by the Revenue. The appellant filed refund claim in respect of 5% revenue deposit deposited during the provisional assessment with the respective authorities i.e. Mumbai, Pune, Hosur. The claim filed at Mumbai have been sanctioned and paid holding that the such amount being revenue deposit the provisions of Section 27 would not apply and consequently bar of unjust enrichment will also not applicable in such cases. The claim filed at Pune was sanctioned but credited to Consumer Welfare Fund applying the doctrine of unjust enrichment. On appeal, the Commissioner (Appeals), Goa allowed the appeal by setting aside the order crediting the amount to Consumer Welfare Fund and directing the revenue deposit be payable to the appellants. The Assistant Commissioner Hosur issued a show cause notice dt. 2.12.2013 alleging that the concept of unjust enrichment is attracted in this case. The sanctioning authority sanctioned the refund claim but credited the same to the Consumer Welfare Fund vide adjudication order dt. 17.6.2004. Aggrieved by the said order, the appellant filed appeal before the Commissioner (Appeals) , who vide impugned order rejected the appeal. The Ld. Commissioner (Appeals) decided the case on the ground that the appellant have not challenged the order wherein the assessment order was finalized and relying on the judgment in the case of Priya Blue Industries Ltd. Vs. Commissioner of Central Excise 2004 (172) ELT 145 (S.C.) the appeal was rejected. Aggrieved by the impugned order, the appellant is before me.
3. Shri Narendra Dave Ld. Chartered Accountant appearing on behalf of the appellant submits that refund of the appellant was already sanctioned and thereafter credited into Consumer Welfare Fund on the ground of unjust enrichment. The Ld. Commissioner (Appeals) has gone beyond the scope of the show cause notice and adjudication order and decided the appeal on altogether different ground that the appellant have not challenged the assessment of the finalization of the provisional assessment. He further submits that the refund arose out of finalization of the provisional assessment which is in respect of 5% revenue deposit, therefore the refund falls under Section 18 of the Customs Act, 1962 whereunder during the period involved in the present case, the provision of unjust enrichment was not existing. The bar of unjust enrichment was inserted by way of Sub-section (5) of Section 18 w.e.f. 13.7.2006 whereas the period involved in the present case is prior to 13.7.2006. Therefore during the material time the bar of unjust enrichment was not applicable in case of refund arise out of finalization of the assessment where the assessment was provisional at the time of clearance of the goods. He placed reliance on the judgment of Commissioner of Customs Vs. Hindalco Industries Ltd. 2008 (231) ELT 36 (Guj.), Mafatlal Industries Ltd. Vs. Union of India 1997 (89) ELT 247, Commissioner of Central Excise., Chennai Vs. TVS Suzuki Limited 2003 (156) ELT 161 (S.C.) and Circular No.744/60/2003-CX dt.11.9.2003. He further submits that in their own case the refund was allowed and matter travelled upto Supreme Court wherein under Civil Appeal No. 3000/2007, the Honble Supreme Court dismissed the Revenues appeal holding that doctrine of unjust enrichment will not apply to provisional assessment.
4. On the other hand, Shri D.K. Sinha, Ld. Assistant Commissioner (A.R. ) appearing on behalf of the Revenue reiterates the findings of the impugned order. He also placed reliance on the following judgments:
(i) Nippon Leakless Talbros Pvt. Ltd. Vs. Commissioner of Customs (Imports), Mumbai 2015-TIOL-692-CESTAT-MUM
(ii) Commissioner of Customs (Import), Mumbai Vs. Kanakia Constructions Pvt. Ltd.
2008 (230) ELT 592 (Bom.)
(iii) Bussa Overseas Pvt. and Properties Pvt. Ltd. Vs. Union of India 2003 (158) ELT 135 (Bom.).
5. I have carefully considered the submissions made by both the sides. I find that the Ld. Commissioner (Appeals) has decided the case on the ground that the appellant have not challenged the assessment order in the light of Honble Supreme Court judgment in the case of Priya Blue Industries Ltd. (supra) whereas the adjudicating authority has already sanctioned the refund but credited into Consumer Welfare Fund applying the provisions of unjust enrichment. Against the sanction of the refund claim there is no appeal from the Revenue therefore Commissioner (Appeals) was not supposed to decide the case of admissibility of the refund, sanction of refund attainted finality. The only issue before the Commissioner (Appeals) was the bar of unjust enrichment, however by deciding the refund the issue arising out of the order-in-original is as regard the issue of unjust enrichment. I find that the refund is in respect of revenue deposit made by the appellant for provisional assessment of imports in terms of Section 18 of the Customs Act, 1962 which reads as under:
Section 18 Provisional assessment of duty. (1) Notwithstanding anything contained in this Act but without prejudice to the provisions contained in section 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 leviable 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 leviable 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 the duty finally assessed and if the amount so paid falls short of, or is in excess of, 1[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. From the above Section 18 prevailing at the time of provisional assessment as per Section 18(2) in case on final assessment if any amount falls in excess the importer shall be entitled to refund. However the bar of unjust enrichment was first time inserted under Section 18 by way of Sub-Section (5) w.e.f. 13.7.2006 which reads as under:
(5) The amount of duty refundable under sub-section (2) and the interest under sub-section (4), if any, shall, instead of being credited to the Fund, be paid to the importer or the exporter, as the case may be, if such amount is relatable to
(a) the duty and interest, if any, paid on such duty paid by the importer, or the exporter, as the case may be, 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 to any other person;
(d) the export duty as specified in section 26;
(e) drawback of duty payable under sections 74 and 75.] From the above, it is clear that at the time of provisional assessment the bar of unjust enrichment in case of a refund arising on finalization of the assessment was not applicable. Therefore, the lower authority has wrongly credited the sanctioned refund in the Consumer Welfare Fund. In the judgment of Mafatlal Industries (supra) the Honble Supreme Court in para 95 observed as under:
95.Rule 9B 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 asssessed 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 9B will not be governed by Section 11A or Section 11B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) re-agitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation. As per the above observation of the Honble Supreme Court, the bar of unjust enrichment is not applicable in case of provisional assessment. In the case of TVS Suzuki Ltd. (supra) the Honble Supreme Court dismissed the appeal of the Revenue holding that in case of provisional assessment unjust enrichment is not applicable. This judgment was accepted by the Central Board of Excise & Customs vide Circular No. 744/60/2003-CX dt. 11.9.2003. I also observed that in the appellants own case the Honble Supreme Court in Civil Appeal No. 3000/2007, held that in case of provisional assessment, the doctrine of unjust enrichment is not applicable. As regard the judgments cited by the Revenue, I have carefully gone through the said judgment and found that the facts of all those cases are not identical to the present case. Therefore the ratio of the judgments relied upon by the Revenue are not applicable. As per my above discussion and settled legal position on the issue in hand, the impugned order is not sustainable, hence, the same is set aside. The appeal of the appellant is allowed.
(Pronounced & Dictated in court) (Ramesh Nair) Member (Judicial) SM.
8Appeal No. C/68/2005