Madras High Court
The Commissioner Of Customs vs M/S.Sakthi Sugars Limited on 29 January, 2020
Author: P.Velmurugan
Bench: P.Velmurugan
C.M.A.(MD).No.337 of 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Judgment Reserved on: 16 / 10 / 2025
Judgment Delivered on : 09/ 01 / 2026
Coram:
THE HONOURABLE MR.JUSTICE P.VELMURUGAN
and
THE HONOURABLE MRS.JUSTICE L.VICTORIA GOWRI
C.M.A.(MD).No.337 of 2020
---
The Commissioner of Customs,
Custom House,
New Harbour Estate,
Tuticorin-628 004. .. Appellant
Vs.
M/s.Sakthi Sugars Limited,
No.180, Race Course Road,
Post Box No.3775,
Coimbatore-641 018. ..
Respondent
Civil Miscellaneous Appeal is filed under Section 130 of the Customs Act,
1962, against the final order No.40175 of 2020, dated 29.01.2020 passed by the
Customs, Excise and Service Tax Appellate Tribunal, Chennai.
For appellant : Mr.R.Gowri Shankar,
Standing Counsel for Customs
For respondent : Mr.S.Muthu Venkataraman
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C.M.A.(MD).No.337 of 2020
JUDGMENT
P.VELMURUGAN, J This Civil Miscellaneous Appeal has been filed by the Revenue under Section 130 of the Customs Act, 1962, challenging the Final Order No.40175 of 2020 dated 29.01.2020 passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai, by which the appeal filed by the Revenue was dismissed and the order of the Commissioner (Appeals) allowing the refund claim made by the respondent was sustained.
2. The case of the respondent is that it is a manufacturer of sugar and had imported raw sugar during the relevant period. At the time of clearance of the imported goods, the respondent paid additional customs duty which included an amount described as sugar cess. It is the consistent stand of the respondent that such payment was made under protest, as they did not accept the levy of sugar cess on imported raw sugar. Subsequently, relying upon the clarification issued by the Ministry of Consumer Affairs, Food and Public Distribution that the cess under the Sugar Cess Act, 1982 was leviable only on sugar manufactured in India and not on imported raw sugar, the respondent filed applications seeking refund of the sugar cess so paid under protest.
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3. The adjudicating authority rejected the refund claim on the ground that the levy had already been assessed under the Bills of Entry, that such assessment had attained finality, and that the importer had not preferred any appeal against the assessment. The authority therefore held that the refund claim could not be entertained under Section 27 of the Customs Act, 1962.
4. Aggrieved thereby, the respondent preferred an appeal before the Commissioner (Appeals), who accepted the contention that since the duty had been paid under protest, the assessment could not be treated as final, and consequently the refund claim was maintainable. The Commissioner (Appeals) also directed verification on the aspect of unjust enrichment before sanctioning the refund. The Department carried the matter before the Customs, Excise and Service Tax Appellate Tribunal, which, by Final Order dated 29.01.2020, dismissed the Department’s appeal and upheld the order of the Commissioner (Appeals). Hence, the present Civil Miscellaneous Appeal.
5. The following substantial questions of law arise for consideration in this appeal:
"(i) Whether the CESTAT is correct in setting aside the Order-in-Appeal No.30/2011-TTN(CUS), dated 29.03.2011 where it Page No.3/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 would not be within the ambit of Section 27 of the Customs Act, 1962 to set aside the order of self-assessment and re-assess the duty for making refund?
(ii) In the absence of any challenge to the order of self-
assessment in appeal, whether any refund application against the assessed duty can be entertained?
(iii) Whether Additional Duty of Customs was leviable under Section 3 of the Customs Tariff Act, 1975 on the imported raw sugar, as on the date of importation, to the extent equal to the duty of excise levied as cess under Section 3 of Sugar Cess Act, 1982 on sugar produced/manufactured in India as on said date?”
6. Mr.R.Gowri Shankar, learned Sanding Counsel appearing for the appellant contended that the Tribunal committed a serious error in law in entertaining and sustaining the refund claim without appreciating that the assessments had attained finality. It was argued that the Bills of Entry had been self-assessed and the duties paid accordingly, and no appeal had been filed against such assessment as required under Section 28 of the Customs Act. According to the Revenue, once the self-assessment was completed and no appeal was filed, the assessment attained finality, and therefore the refund authority could not reopen or sit in appeal over such assessment in the guise of considering a refund application. Reliance was placed on the decisions of the Page No.4/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 Hon’ble Supreme Court in Priya Blue Industries Ltd. v. Commissioner of Customs (P) [2004 (172) E.L.T. 145 (S.C.)] and ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV, [2019 (368) E.L.T. 216 (S.C.)] wherein it has been held that unless an assessment order is modified on appeal or review, the same attains finality, and that a refund claim cannot be treated as an appellate proceeding to reopen such assessment. It was therefore urged that the Commissioner (Appeals) and the Tribunal erred in law in allowing refund of the cess without there being any challenge to the assessment order.
7. The learned Standing Counsel further submitted that sugar cess, though collected by the Customs Department, is in essence a duty of excise and therefore falls within the scope of Section 3(1) of the Customs Tariff Act, 1975. Under that provision, any imported goods are liable to an additional duty of customs equivalent to the excise duty leviable on like goods if produced or manufactured in India. Accordingly, it was contended that the levy of sugar cess on imported raw sugar was proper and in accordance with law, and the contrary view taken by the Commissioner (Appeals) and the Tribunal runs counter to the scheme of the Act. He also relied upon the Larger Bench decision of the Tribunal in T.T.K.-LIG Ltd. v. Commissioner of Customs [2006 (193) E.L.T. 169 (Tri.- LB)], to submit that additional duty of customs includes duties and cesses of excise nature levied under other enactments. The learned counsel therefore Page No.5/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 argued that the Tribunal failed to appreciate the settled legal position and erroneously held that the sugar cess was not leviable on imported raw sugar, ignoring the statutory provisions and binding judicial precedents. Hence, the learned Standing Counsel prays to set aside order passed by the Tribunal.
8. Per contra, the learned counsel for the respondent submitted that the appeal filed by the Revenue is not maintainable before this Court since the issue involved relates to the rate of duty of customs, which under Section 130E(b) of the Customs Act, 1962 falls within the exclusive jurisdiction of the Supreme Court. It was pointed out that cess, whether described as sugar cess or otherwise, is in the nature of duty and forms part of the rate of duty. Therefore, any dispute concerning its levy or refund is directly relatable to the rate of duty and cannot be entertained by the High Court. Reliance was placed on the decisions of the Supreme Court in Commissioner of Customs v. Aasu Exim Pvt. Ltd., 2018 (360) ELT 386 and Steel Authority of India Ltd. v. DGAD, 2017 (349) ELT 193, which held that such questions are outside the purview of the High Court. It was further submitted that the respondent had paid sugar cess under protest at the time of import. Once payment is made under protest, the assessment does not attain finality. Section 17(5) of the Customs Act, 1962 mandates that where the assessment is contrary to the claim of the importer, the proper officer must pass a speaking order within fifteen days unless the importer Page No.6/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 accepts the assessment in writing. In the present case, the respondent did not accept the assessment but lodged a protest. The Department failed to pass a speaking order as required under law. Consequently, the assessment cannot be treated as final and binding. In such circumstances, the respondent was entitled to seek refund under Section 27 of the Customs Act, 1962, which permits refund of duty paid in excess or not legally required, without insisting upon reassessment or appeal. The reliance placed by the appellants on Priya Blue Industries, 2004 (172) ELT 145 and ITC Ltd., 2019 (368) ELT 216 was distinguished, as those cases proceeded on the footing that the assessment had attained finality in the absence of protest. Here, protest was lodged, hence the principle laid down in Priya Blue does not apply. It was contended that the argument of the appellants that the Bills of Entry were finally assessed is misconceived. The protest ensures that the assessment does not attain finality. Having compelled payment under protest, the Department cannot deny refund by insisting on reassessment or appeal. Reliance was placed on Commissioner of Customs v. Sakthi Sugars Ltd., 2020 (372) ELT 577 and HDFC Bank Ltd. v. Principal Commissioner of GST & CE, 2020 (7) TMI 362, wherein it was held that protest prevents finality of assessment and obliges the Department to pass a speaking order.
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9. Without prejudice to the above submissions, it was argued that even assuming sugar cess is treated as excise duty, the same is available as CENVAT credit under Section 3 of the Customs Tariff Act, 1975 read with the CENVAT Credit Rules, 2004. The respondent had paid sugar cess of Rs.66,66,045/- under protest, of which credit of Rs.63,283/- was availed and refund claim for that portion was withdrawn. The balance of Rs.66,02,762 was kept under “Deposit – Others” and not passed on to consumers. Certificates from Central Excise Superintendents, statutory auditors and ledger extracts confirm non-availment of credit and non-passing of incidence. Hence, the situation is revenue neutral, as whether cess is refunded or availed as credit, there is no net loss to the exchequer. Reliance was placed on UOI v. Flemingo Duty Free Shop Pvt. Ltd., 2025 (5) TMI 467, CIT v. J.K. Charitable Trust, (2009) 1 SCC 196, CCE v. Narmada Chemathur Pharmaceuticals Ltd., (2005) 10 SCC 123, and Principal Commissioner of Customs v. Granules India Ltd., 2025 (391) ELT 505, all of which recognize the doctrine of revenue neutrality and hold that refund or credit must be granted to avoid unjust enrichment. It was finally submitted that the issue involved in the present case falls within the exclusive jurisdiction of the Supreme Court under Section 130E(b) of the Customs Act, 1962. The appeal filed by the Revenue is therefore liable to be dismissed. The Page No.8/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 order of the Tribunal, which upheld the order of the First Appellate Authority allowing refund, is sustainable in law. The respondent is entitled to refund under Section 27 of the Customs Act, 1962, and alternatively, even if cess is held leviable, the situation is revenue neutral as credit is available. The learned counsel accordingly prayed that the appeal be dismissed and the order of the Tribunal be upheld.
10. This Court heard both sides and carefully examined the records, including the orders of the adjudicating authority, the Commissioner (Appeals), and the Tribunal.
Substantial question of law (i)
11. It is an admitted fact that the respondent is a manufacturer of sugar and imported raw sugar during the relevant period. Bills of Entry were filed and self-assessed under Section 17 of the Customs Act, 1962, with payment of duties, including the sugar cess. The assessments were not provisional. It is not in dispute that the respondent did not file any appeal under Section 128 of the Act challenging the assessments. Subsequently, refund applications were filed under Section 27 of the Act seeking refund of the sugar cess paid.
12. The contention of the respondent is that the duty was paid under Page No.9/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 protest and therefore the assessments cannot be treated as final. This Court finds that a protest, while recorded, is not a substitute for the statutory remedies provided under the Act. The Customs Act, 1962 envisages a complete scheme for challenging assessments. A self-assessment under Section 17 attains finality unless modified in appeal under Section 128 or by review under Section 28. Section 27 provides a mechanism for the refund of duty paid pursuant to an assessment but does not authorize the refund authority to re-examine or indirectly reopen a concluded assessment. The Hon’ble Supreme Court in Priya Blue Industries Ltd. v. Commissioner of Customs (P) [(2004) 172 ELT 145 (SC)] and ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV [(2019) 368 ELT 216 (SC)] has held that refund proceedings cannot be treated as appellate proceedings and that unless an assessment is modified or set aside in appeal or review, refund claims contrary to such assessment are not maintainable in law. At this juncture, it would be useful to refer to the above judgments:-
(i) Priya Blue Industries Ltd. v. Commr. of Customs (Preventive), (supra) “5. Under Section 27 of the Customs Act, 1962, a claim for refund can be made by any person who had (a) paid duty in pursuance of an order of assessment, or (b) a person who had borne the duty. It has been strenuously submitted that the words “in pursuance of an order of assessment” necessarily imply that a claim for refund can be made without challenging the assessment in an appeal. It is submitted that if the assessment is not correct, a party could file Page No.10/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 a claim for refund and the correctness of the assessment order can be examined whilst considering the claim for refund. It was submitted that the wording of Section 27, particularly, the provisions regarding filing of a claim for refund within the period of 1 year or 6 months also showed that a claim for refund could be made even though no appeal had been filed against the assessment order. It was submitted that if a claim for refund could only be made after an appeal was filed by the party, then the provisions regarding filing of a claim within 1 year or 6 months would become redundant as the appeal proceedings would never be over within that period. It was submitted that in the claim for refund the party could take up the contention that the order of assessment was not correct and could claim refund on that basis even without filing an appeal.
6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India) case [(2000) 6 SCC 650] . Once an order of assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an appeal, that order stands. So long as the order of assessment stands the duty would be payable as per that order of assessment. A refund claim is not an appeal proceeding. The officer considering a refund claim cannot sit in appeal over an assessment made by a competent officer. The officer considering the refund claim cannot also review an assessment order. “
(ii) ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV (supra)
41. It is apparent from the provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise.
42. It was contended that no appeal lies against the order of self- assessment. The provisions of Section 128 deal with appeals to the Commissioner (Appeals). Any person aggrieved by any decision or order may Page No.11/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 appeal to the Commissioner (Appeals) within 60 days. There is a provision for condonation of delay for another 30 days. The provisions of Section 128 are extracted hereunder:
“128. Appeals to Commissioner (Appeals).—(1) Any person aggrieved by any decision or order passed under this Act by an officer of customs lower in rank than a Principal Commissioner of Customs or Commissioner of Customs may appeal to the Commissioner (Appeals) within sixty days from the date of the communication to him of such decision or order:
Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days.
(1-A) The Commissioner (Appeals) may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.
(2) Every appeal under this section shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf.”
43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression “Any person” is of wider amplitude. The Revenue, as well as the assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of reassessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-assessment. The order of self-assessment is an order of assessment as per Section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of reassessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against “any order” which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is Page No.12/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts [Escorts Ltd. v. Union of India, 1994 Supp (3) SCC 86] .
44. The provisions under Section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self- assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or reassessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, reassessment is not permitted nor conditions of exemption can be adjudicated. Reassessment is permitted only under Sections 17(3), (4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will virtually amount to an order of assessment or reassessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the refund provisions under Section 27. In Hero Cycles Ltd. v. Union of India [Hero Cycles Ltd. v. Union of India, 2009 SCC OnLine Bom 801 : (2009) 240 ELT 490 (Bom)] though the High Court interfered to direct the entertainment of refund application of the duty paid under the mistake of law. However, it was observed that amendment to the original order of assessment is necessary as the relief for a refund of claim is not available as held by this Court in Priya Blue Industries Ltd. [Priya Blue Industries Ltd. v. Commr. of Customs, (2005) 10 SCC 433 : (2004) 172 ELT 145]”
13. Applying these principles to the facts of the present case, the respondent did not challenge the self-assessments through the statutory Page No.13/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 mechanism. The Bills of Entry were self-assessed and duly paid, and the assessments were not provisional. Therefore, they had attained finality. Payment under protest, without pursuing the statutory remedies, cannot prevent the assessment from attaining finality. Allowing refund in these circumstances would permit the respondent to circumvent the statutory appellate process, which is impermissible. Consequently, the Tribunal erred in sustaining the refund under Section 27. Accordingly, the first substantial question of law is answered in favour of the Revenue and against the respondent.
Substantial question of law (ii)
14. The second substantial question of law is whether, in the absence of any challenge to the self-assessment, a refund claim against the assessed duty is maintainable. As discussed above, refund proceedings under Section 27 are not appellate in nature and cannot be used to indirectly question the legality or correctness of a concluded assessment. The Supreme Court in Priya Blue Industries Ltd. and ITC Ltd. has consistently held that unless an assessment order is modified in appeal or review, a refund claim cannot be entertained against the assessment. In the present case, the respondent did not avail of the statutory remedies. The self-assessments, therefore, remained binding. The refund claims filed under Section 27 are not maintainable in such circumstances. This question is also answered in favour of the Revenue and against the respondent.
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15. In view of the findings recorded by this Court on the first and second substantial questions of law, holding that the self-assessments had attained finality and that the refund claims filed under Section 27 of the Customs Act, 1962 were not maintainable in the absence of any challenge to such assessments, the issue relating to the correctness or otherwise of the levy of sugar cess as part of the additional duty of customs does not arise for consideration in the present appeal. It is a settled principle that courts should refrain from adjudicating issues which are not necessary for the disposal of the case. Since the refund itself has been held to be not maintainable on jurisdictional and statutory grounds, any determination on the nature of sugar cess under the Sugar Cess Act, 1982, or its includibility within the ambit of additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975, would be merely theoretical. Accordingly, the third substantial question of law is left open, to be decided in an appropriate case where the issue directly arises for adjudication.
16. In conclusion, this Court holds that the first and second substantial questions of law are answered in favour of the Revenue and against the respondent. In view of the findings recorded on the said questions, the refund claims filed by the respondent under Section 27 of the Customs Act, 1962 are Page No.15/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 not maintainable, and the orders of the Commissioner (Appeals) and the Customs, Excise and Service Tax Appellate Tribunal, Chennai, allowing the refund suffer from errors of law and cannot be sustained. The third substantial question of law having been expressly left open, the Civil Miscellaneous Appeal is allowed, the order of the adjudicating authority rejecting the refund claim is restored, and the impugned orders of the Commissioner (Appeals) and the Tribunal are set aside. No costs.
[P.V., J.] [L.V.G., J.]
09 / 01 / 2026
Index: Yes/no.
Neutral Case Citation: Yes/no.
Speaking Order: Yes/no.
rns
To
1. The Customs, Excise and Service Tax Appellate Tribunal, (CESTAT), South Zonal Regional Bench, Chennai.
2. The Commissioner of Customs and Central Excise (Appeals), Tiruchirapalli.
3. The Deputy Commissioner of Customs (Refunds), Custom House, Tuticorin. Page No.16/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 P. VELMURUGAN, J.
and L. VICTORIA GOWRI, J.
rns Pre-delivery Judgment in C.M.A.(MD).No.337 of 2020 Page No.17/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm ) C.M.A.(MD).No.337 of 2020 Judgment delivered on 09/01/2026 Page No.18/18 https://www.mhc.tn.gov.in/judis ( Uploaded on: 19/01/2026 01:26:58 pm )