Gujarat High Court
Commissioner vs Millat on 19 March, 2010
Gujarat High Court Case Information System
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TAXAP/582/2008 7/ 7 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 582 of 2008
With
CIVIL
APPLICATION No. 138 of 2008
In
TAX APPEAL No. 582 of 2008
For
Approval and Signature:
HONOURABLE
MR. JUSTICE D.A.MEHTA
HONOURABLE
MS. JUSTICE H.N.DEVANI
=========================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================
COMMISSIONER
OF CUSTOMS - Appellant(s)
Versus
MILLAT
FIBERS (1OO% EOU) - Opponent(s)
=========================================
Appearance
:
MR AY KOGJE
for Appellant(s) :
1,
NOTICE UNSERVED for Opponent(s) :
1,
=========================================
CORAM
:
HONOURABLE
MR. JUSTICE D.A.MEHTA
and
HONOURABLE
MS. JUSTICE H.N.DEVANI
Date
: 19/03/2010
ORAL
JUDGMENT
(Per : HONOURABLE MS. JUSTICE H.N.DEVANI)
1. In this appeal under section 130 of the Customs Act, 1962 (the Act) Appellant-Revenue has challenged order dated 30th November, 2007 made by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal) proposing the following questions stated to be substantial questions of law:-
Whether, in the facts and circumstances of the case, the Tribunal is justified in rejecting the appeal of the Revenue and confirming the order of the adjudicating authority on the ground that exercise of powers under Section 28 of the Customs Act, 1962 cannot be resorted for recovering the amount of Customs Duty erroneously refunded?
Whether, in the facts and circumstances of the case, the Tribunal is justified in confirming the order of the Commissioner (Appeals), inter alia, holding that examination of the issue in case of erroneously refunded duty amount under Section 28 of the Customs Act, 1962 on the Doctrine of Unjust Enrichment would amount to review of order of the adjudicating authority sanctioning the refund?
Whether, in the facts and circumstances of the case, the Tribunal is justified in confirming the order of the Commissioner (Appeals) who allowed the appeal of the respondent on the ground not urged in the memo of the appeal by him?
2. The respondent herein at the relevant time was holding a licence of 100% EOU. In connection with alleged illicit clearance of imported Polyester Filament Yarn show cause notice dated 19.9.2002 came to be issued against the respondent. The show cause notice came to be adjudicated vide order-in-original dated 30th October, 2003 whereby interalia, demand of customs duty amounting to Rs.5,34,695/- was confirmed. In appeal, the Commissioner (Appeals) held that the adjudicating authority had no jurisdiction to confirm such a demand and set aside only that part of the order, whereas the order of confiscation under section 111 of the Act and redemption fine under section 125(1) of the Act was upheld. As the respondent had already deposited the duty amount, it made an application for refund. Vide order-in-original dated 22nd February, 2005, the claim for refund to the extent of Rs.2,92,585/- came to be rejected whereas refund of Rs.2,42,110/- came to be sanctioned. However, it was directed that the sanctioned refund be appropriated against pending dues.
3. Later on the adjudicating authority noticed that the doctrine of unjust enrichment was not verified before sanctioning refund of Rs.2,42,110/-. He, therefore, issued a show-cause notice dated 07.06.2005 to the respondent as to why the refund which was sanctioned and erroneously refunded by appropriating the same against Government dues should not be rejected and the appropriated amount should not be recovered under section 28 read with section 72 of the Act in absence of any proof of incidence of duty not being passed on. The show-cause notice came to be adjudicated vide order dated 15th February, 2006 whereby the adjudicating authority sanctioned refund of Rs.2,42,110/- and ordered the same to be credited to the Consumer Welfare Fund.
4. The respondent carried the matter in appeal before Commissioner (Appeals) who, vide order dated 26th June, 2006, held that the issue of second show-cause notice after having already passed an order sanctioning refund by the adjudicating authority would amount to reviewing his own order. That the proper course for the Department was to review the order under section 129D(2) of the Act and thereafter, file an appeal under section 129D(4) of the Act. The Commissioner (Appeals) held that as the order passed by the adjudicating authority amounts to review of his own order, the same was not permissible and accordingly allowed the appeal.
5. Revenue carried the matter in appeal before the Tribunal. The Tribunal agreed with the reasoning adopted by the Commissioner (Appeals) and dismissed the appeal.
6. Mr. A. Y. Kogje, learned Standing Counsel for the appellant revenue invited attention to the provisions of section 28 of the Act to submit that where any duty has been erroneously refunded, it is permissible for the adjudicating authority to serve notice requiring the concerned person to show cause as to why he should not pay the amount specified in the notice. It was submitted that while making the order dated 22nd February, 2005 the aspect of unjust enrichment had not been considered, hence the refund made pursuant to the said order could be said to have been erroneously refunded so as to bring the same within the ambit of section 28 of the Act. It was, accordingly, submitted that the questions of law as proposed, arise out of the impugned order of the Tribunal.
7. The record of the case indicates that vide order dated 22nd February, 2005, the adjudicating authority had adjudicated on the claim of refund made by the respondents. At the relevant time, it was permissible for the adjudicating authority to go into all issues which were necessary to be looked into for the purpose of deciding the application for refund, including the aspect of unjust enrichment. The adjudicating authority after duly considering the claim of the respondent rejected part of the claim and allowed the claim to the extent of Rs.2,42,110/- and directed that the same should be appropriated against outstanding Government dues. Later on after the said order was implemented another show cause notice came to be issued calling upon the respondent to show cause as to why the refund claim of Rs.2,42,110/- sanctioned and erroneously refunded by appropriating against the outstanding Government dues should not be rejected and amount so appropriated should not be recovered under section 28 read with section 27 of the Customs Act, 1962 in absence of proof regarding burden of duty being not passed on. The very frame of the show-cause notice indicates that the adjudicating authority was reviewing the earlier order inasmuch the respondent had been called upon to show cause as to why the refund granted by the earlier order should not be rejected.
8. Sub-section (2) section 129D empowers the Commissioner of Customs to call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under the Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and to direct such authority to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner in his order. Sub-section (4) thereof provides for preferring an appeal against the order of the concerned authority. In the circumstances, if the adjudicating authority was of the view that the doctrine of unjust enrichment had not been examined while making the order of refund, the proper course to adopt was to take recourse to the provisions of section 129D. A perusal of the order-in-original dated 15.02.2006 shows that the adjudicating authority has held that the refundable amount of Rs.2,42,110/- is required to be credited to the Consumer Welfare Fund established under section 12 C of the Central Excise Act, 1944 and that the same cannot be refunded to the party by appropriating against outstanding Government dues of Rs.2,75,306/- of Customs Duty vide OIO dated 13.02.2004. Thus in effect and substance the adjudicating authority, has set aside its earlier order dated 13.2.2004 whereby the refund amount had been ordered to be appropriated against outstanding Government dues. The adjudicating authority has no power or authority under the Act to reconsider or review or sit in appeal over its earlier order. No such power or authority has been pointed out by the learned counsel for the appellant.
9. In the aforesaid factual background, the Commissioner (Appeals) was justified in holding that the show-cause notice issued by the adjudicating authority on the ground of unjust enrichment, would amount to review of his own order which was not permissible. The view expressed by the Commissioner (Appeals) that the proper course of action was for the Department to review the order under section 129D(2) of the Act and thereafter file appeal under section 129D(4) is in consonance with the provisions of the Act. The impugned order of the Tribunal whereby it has confirmed the findings recorded by the Commissioner (Appeals) does not suffer from any legal infirmity so as to warrant interference. No question of law, much less any substantial question of law can be stated to arise out of the impugned order of the Tribunal.
10. The appeal is accordingly dismissed with no order as to costs.
Civil Application No.138 of 2008 In view of the order passed in the main Tax Appeal, this application would not survive and is disposed of accordingly.
( D.A. Mehta, J. ) ( Harsha Devani, J. ) hki Top