Custom, Excise & Service Tax Tribunal
Mumbai vs Goodwill Sales Pvt Ltd on 2 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/762/2004
[Arising out of Order-in-Appeal No: 214/2004-MCH dated 18th May 2004 passed by the Commissioner of Customs (Appeals), Mumbai]
For approval and signature:
Honble Shri M V Ravindran, Member (Judicial)
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Commissioner of Customs (Export)
Mumbai
Appellant
versus
Goodwill Sales Pvt Ltd
Respondent
Appearance:
Shri M.K. Mall, Asstt. Commissioner (AR) for the appellant Shri Nimesh Mehta, Advocate for the respondent CORAM:
Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 02/02/2016 Date of decision: 02/08/2016 ORDER NO: ____________________________ Per: C J Mathew:
Revenue is aggrieved that the first appellate authority has, allegedly, unsettled a settled assessment to enlarge the scope of an appeal against the rejection of a refund claim, which the original authority had declined to entertain for want of jurisdiction, to direct the acceptance of declared price for assessment to duties of customs and the processing of the consequential relief as refund.
2. Briefly narrated, M/s Goodwill Sales Pvt Ltd, who had imported 24 consignments of gambier under the Duty Free Replenishment Certificate (DFRC) scheme of the Foreign Trade Policy between 14th July 2004 and 18th December 2004 by declaring values between US$ 1000 and US$ 1350 per MT, were subject to assessment by enhancing the value to US$ 1750 per MT. Importer paid the assessed duty and filed a claim for refund of Rs 20,46, 849 being the differential additional duty of customs paid in consequence. The scheme entitles the importer to exemption of basic customs duty upto a value specified in the licence and the importer is charged with the additional duty of customs. Re-credit of excess value of ` 1,26,66,127 arising from enhancement of assessable value was also sought.
3. The Assistant Commissioner of Customs (Group VII) who had examined the claim for refund declared himself to be lacking in jurisdiction to revisit an assessment that had attained finality owing to absence of challenge to it and ventured to render the opinion that the remedy for grievances relating to assessment was to file an appeal before the Commissioner (Appeals) under section 128 of Customs Act, 1962. While thus disposing off the claim under section 27 of Customs Act, 1962, the original authority did not hold any part, or parts, of the claim to be barred by limitation prescribed therein. The rejection was also rendered without citing any statutory provision, administrative instruction or case law to justify the conclusion.
4. From the records available with us, it would appear that the enhancement was effected ostensibly in exercise of powers under rule 10A of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. In the appeal preferred before Commissioner of Customs (Appeals), the importer, though aggrieved by an order that was restricted to rejection of refund claim on limited ground of jurisdiction, laid out the lack of justification for enhancement by pointing out the non-compliance with the procedure in the said Rules for re-determination and, in particular, to the repeated refusal to furnish reasons for rejecting the declared value. In the circumstances, it may not be out of place to refer to the rule in question:
10A. Rejection of declared value.
(1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods too furnish further information including documents or other evidence and if, after receiving such information or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the value of such imported goods cannot be determined under the provisions of sub-rule (1) of rule 4.
(2) At the request of the importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking the final decision under sub-rule (1).
While the rule allowed the assessing officer to reject the declared value in accordance with procedure prescribed, it also required the officer to comply with the valuation rules to arrive at the new assessable value which was also allegedly observed in its breach.
5. Commissioner (Appeals), in the impugned order-in-appeal no: 214/2004-MCH dated 18th May 2004, taking note that the importer was prevented from challenging the assessment owing to the failure to furnish an appealable order as prescribed in rule 10A supra, proceeded to set aside the enhanced value in the assessment. Further, it was also held that the lower authority was not without jurisdiction in deciding on the refund claim, even in the absence of a separate and specific quashing of the assessment, by relying on the decision of the Tribunal in Bengal Tools Ltd v. Commissioner of Customs, Calcutta [2003 (109) ECR 252 (Tri.)] and TELCO Ltd v. Commissioner of Customs, Mumbai [2003 (158) ELT 640 (Tri.-Mumbai)] and that of the Honble Supreme Court in Karnataka Power Corporation Ltd. v. Commissioner of Customs [2002 (143) ELT 482] as well as the order dated 11th September 2001 incorporated in Customs Manual of Instruction issued by Central Board of Excise & Customs. The first appellate authority went on to render a finding that the enhancement was not only procedurally flawed but also not legally sustainable owing to lack of recorded evidence for doubting the declaration at the time of import.
6. It is the contention of Revenue that the first appellate authority had failed to take note of alternative decisions of the Tribunal, confirmed by the Honble Supreme Court, that a refund application was not to be entertained without disputing assessment and had failed to appreciate that the decisions relied upon related to classification which was, in any case, remanded back to original authorities to resolve the dispute. Revenue also questions the propriety of the preference accorded to the instruction dated 11th September 2001 in the Customs Manual of Instructions of Central Board of Excise & Customs while disregarding the circular no. 24/2004-Cus dated 10th March 2004 of the Central Board of Excise & Customs. We note that the former directs that claims for refund of duty by importers be disposed off on merit whereas the latter, relying on the decision of the Honble Supreme Court in re M/s Super Cassette Industries [2003 (58) RLT F9], M/s Motilal Dulchand [2003 (157) ELT A265] and M/s HCL Perot Systems Ltd v. Commissioner of Customs, New Delhi [dated 6th October 2003 in CAD no. 13751/ 2003], has instructed field formations not to allow refund claims except as consequential relief on successful challenge to assessment orders.
7. We take notice that the impugned order has restored the claim for refund by setting aside the rejection and has, concurrently, resolved the assessment in favour of M/s Goodwill Sales Pvt Ltd by setting aside the enhancements in the bill of entry. Both Learned Authorised Representative and Learned Counsel presented their respective arguments in support of and against the appeal of Revenue. The factual matrix that emerges is that the refund claim was filed to resolve the dispute on the assessment of gambier and that the imported goods had been subjected to enhancement in value without following the procedure laid down in the Customs (Determination of Value of Imported Goods) Rules, 1988 to reject the declared value or in arriving at the assessable value. It is also not disputed in the review of the impugned order that the finding of the appellate authority on lack of evidence of value of contemporaneous imports was a reflection of the facts. It would appear, therefore, that had the respondent challenged the assessment before the Commissioner (Appeals) under section 128 of Customs Act, 1962, it would have succeeded and would, in consequence, have been eligible for the refund.
8. Accordingly, the first issue that arises for determination is whether the Commissioner (Appeals) was within jurisdiction to reject the enhancement of the declared value. There can be no two views that the order impugned before the first appellate authority was the rejection of the refund claim. We cannot, however, but note that the order of rejection did touch upon the assessment by drawing attention to the finality of the enhancement in the hands of the assessing authority. It is also on record that the enhancement was disputed in the appeal filed before the first appellate authority. Considering the contents of the pleas in the appeal, as recorded in the appellate order, as well as the studied silence on the part of the reviewing authority in not disputing the finding on the impropriety of enhancement, the order directing the adoption of declared value is not questionable. The authority before whom the appeal against the rejection of refund claim was filed is the very same authority who was empowered to decide a challenge to assessment. That he chose to exercise his jurisdiction concurrently to restore the refund claim and decide on the assessment, as insisted upon by the lower authority as a pre-requisite, cannot, of itself, be considered improper.
9. We have noted supra that the finding against the assessment has not been contested on merit in the appeal of Revenue. The imports were effected over a period of time and the assessing authority had, as seen from the records, steadfastly refused to be held accountable for the revision in the assessable value. The importer was afforded the cause of action, but not the wherewithal, viz. an adjudication order, to place the dispute before the Commissioner (Appeals). The appeal by Revenue, on the other hand, claims that the importer was not without the recourse to appeal because the assessment in a bill of entry is an adjudication order.
10. We do not consider that to be so as assessment is defined in section 2(2) of Customs Act, 1962 as:
(2) asssessment includes provisional assessment, re-assessment and any order of assessment in which the duty assessed is nil Assessment re-assessment and provisional assessment are actions enumerated in sections 17 and 18 of Customs Act, 1962 and is the crystalisation of duty liability under these provisions. Imported goods are allowed to be cleared for home consumption on payment of duty as assessed. Likewise, export goods are allowed to be cleared for loading on payment of duty as assessed. From this it can be surmised that assessment is the stage immediately preceding removal from custody under the Customs Act, 1962. There is no definition of adjudication order in the Customs Act, 1962 which has, however, defined adjudicating authority in section 2(1) thus:
(2) adjudicating authority means any authority competent to pass any order or decision under the Act, but does not include That the importer was entitled to due process, we note from the provisions of the Customs Manual of Instructions which instructs:
14. The principles of natural justice are also required to be followed in valuation matters. When the Customs authorities do not accept the declared value and re-determine the Customs value, the importer or his representative I required to be given a written notice normally and even a personal hearing. An adjudication order giving in detail the basis of determination of value can be obtained if the importer is aggrieved with re-determination of value. Under the Customs Act, 1962, an importer can appeal against a decision on valuation to the Commissioner (Appeals) in the first instance. A second appeal lies to the Tribunal consisting of administrative and judicial members. A third appeal lies to the Supreme Court of India. The importer is informed regarding his rights of appeal by each of the adjudicating and appellate authorities. It is apparent that the enhancement of assessable value by the assessing officer was without authority. That lacuna cannot be rectified by mere access to appellate remedies through a bill of entry as a cause of action. For the purposes of section 128 of Customs Act, 1962, however, assessment and adjudication, though different, are orders or decisions. There is no contest to the findings on assessment recorded by the appellate authority. There is also submission to the effect that the appellate authority was barred by limitation to take up the issue for resolution. Accordingly, the scrutiny of the assessment by the first appellate authority is upheld on jurisdictional grounds as well as on merit. The cavil of Revenue that assessment was not disputed is, therefore, not sustainable with this substantive compliance of the pre-requisite agitated in the appeal before us.
11. A dispute in assessment can arise from adoption of a value or adoption of a rate of duty. In the imports of the respondent, the genesis was the adoption of uniform rate of US$ 1750 instead of the varying prices declared for each consignment. The issue in dispute is identical in all the 24 consignments and resolution of the dispute in any one bill of entry would settle the dispute in all the bills of entry. With such a resolution in favour of the importer, claim for refund is merely required to satisfy the prescription in section 27 of Customs Act, 1962.
12. The other issue for determination is whether the first appellate authority was correct in restoring the refund claim to the jurisdictional competence of the original authority. While making allowances for the wariness displayed, without any substantiation, by the original authority in according sanction to the claim for refund in the absence of challenge to the assessment itself, we note with disapproval that the claim has been disposed off without placing the claimant on notice. The scheme of section 27 of Customs Act, 1962 empowers the Assistant Commissioner to sanction the refund, subject to his satisfaction, by transfer of the amount to the Fund or by releasing it to the claimant. Admittedly, it does not prescribe issue of a show cause notice but it does admit to disallowing of claims that are not to the satisfaction of the authority. It is settled law that claim may be rejected and, concomitantly, settled law insists that detriment cannot be visited upon a tax-payer without prior notice. No such notice was issued by the Assistant Commissioner of Customs ever. Though we observe that he has recorded waiver of right to notice by the claimant, the circumstances of this waiver are not recorded and it is reasonable to deduce that the claimant may not, in the most pessimistic of moods, have imagined that the claim would be rejected. Had the claimant been aware that the refund was liable to be rejected because of failure to dispute assessment, the reaction may well have been to rectify the alleged defect. In such a circumstance, the refund claim need not have been disposed off but kept pending till the correctness of enhancement was decided upon in appeal. And the assessment dispute now stands settled by the appellate authority.
13. As we have noted supra, the original authority has merely alienated its jurisdiction without adducing any grounds for doing so. The first appellate authority has pointed out the provisions of the Customs Instruction Manual to hold this alienation to be unsustainable. Undoubtedly, the decision of the Honble Supreme Court in Collector of Central Excise, Kanpur v. Flock (India) Pvt Ltd [2000 (120) ELT 285 (SC)] had been rendered by then; it was, however, in the context of a refund under the Central Excise Act, 1944 and the Assistant Commissioner did not even make a passing reference to that judgment as the authority for alienation of jurisdiction vested in him under section 27 of the Customs Act, 1962. It is worthwhile to reproduce the relevant portion of the judgment:
8.?From the aforementioned provisions of the Act the position is clear that any order passed by an authority under the Act is appealable to the Collector (Appeals) and a further appeal to the appellate tribunal against the order of the Collector (Appeals) is also provided in section 35. The hierarchy of authorities for adjudication and determination of a matter relevant for charging the excise duty is for a purpose. It is not an empty formality. Classification of the goods manufactured by an assessee is important for the purpose of levy and collection of excise duty. Under Rule 173B every assessee is required to file with the proper officer a list of goods manufactured by him for approval and the proper officer shall after such inquiry as he deems fit approve the list with such modifications as are considered necessary and all clearances are to be made only thereafter.
9.?A right of appeal is a creature of the statute. It is a substantive right. An order of the appellate authority is binding on the lower authority who is duty bound to implement the order of the superior authority. Refusal to carry out the direction will amount to denial of justice and destructive of one of the basic principles in the administration of justice based on hierarchy of authorities.
10.?Coming to the question that is raised there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing his order. If this position is accepted then the provisions for adjudication in the Act and the Rules, the provision for appeal in the Act and the Rules will lose their relevance and the entire exercise will be rendered redundant. This position in our view, will run counter to the scheme of the Act and will introduce an element of uncertainty in the entire process of levy and collection of excise duty. Such a position cannot, be countenanced. The view taken by us also gain support from the provision in sub-rule (3) of Rule 11 wherein it is laid down that where as a result of any order passed in appeal or revision under the Act, refund of any duty becomes due to any person, the proper officer, may refund, the amount to such person without his having to make any claim in that behalf. The provision indicates the importance attached to an order of the appellate or revisional authority under the Act therefore, an order which is appealable under the Act is not challenged then the order is not liable to be questioned and the matter is not to be reopened in a proceeding for refund which if we may term it so is in the nature of execution of a decree/order. In the case at hand it was specifically mentioned in the order of the Assistant Collector that the assessee may file appeal against the order before the Collector (Appeals) if so advised.
14. The Honble Supreme Court has, juxtaposing the refund and appellate procedures in Central Excise Act, 1944, arrived at the conclusion supra. That the provisions of section 27 of Customs Act, 1962 and section 11B of Central Excise Act, 1944 are not pari materia has been the consistent claim in disputes relating to refund of import duties. The Tribunal, in its wisdom, had decided that such a pre-requisite be equally applicable to refunds claimed under section 27 of Customs Act, 1962. Notwithstanding the pendency of those disputes before the Honble Supreme Court, the alienation by the original authority may have had some semblance of responsible behaviour had these been cited. This is a glaring lack. Revenue, on the other hand, cites circular no. 24/2004-Cus dated 18th March 2004 of Central Board of Excise & Customs as binding on all officers. This, in our view, does not suffice to justify the action of the lower authority as the alienation in the order-in-original was recorded without the benefit of this instruction. Prescience and premonition may have been endowed by nature on some special beings but they are anathema to the practical world of taxation. Revenue has also not claimed so in the review order.
15. It would appear that, on the day of rejection of the refund claim, the original authority was not under instructions to disregard refund claims that were submitted without an appellate order setting aside the assessment. The original authority determined ineligibility for the refund claim without any recorded or acceptable rationale. The first appellate authority has, in accordance with the law as it then prevailed, set aside the rejection by the lower authority and restored the refund claim.
16. Consequently, we uphold the restoration of the refund claim stands restored. In the light of subsequent decision of the Honble Supreme Court in upholding the orders of the Tribunal enumerated in circular no. 24/2004-Cus dated 18th March 2004, the first appellate authority has erased the impediment by resolving the assessment dispute which was well within its jurisdiction to do so. That jurisdiction, even if deemed to have been exercised in the latest bill of entry, settles the principle that declared value could not have been rejected for assessment making it applicable to all assessments that preceded it. We note the enunciation by the Honble Supreme Court in re Priya Blue Industries Ltd rendered on 17th September 2004 and find that resolution of disputed assessment in the impugned order suffices to confer propriety on the restored refund claim. The competent authority under section 27 is required to grant relief consequent thereon.
17. For the above reasons, appeal of Revenue is devoid of merits and dismissed.
(Pronounced in Court 02/08/2016) (M V Ravindran) Member (Judicial) (C J Mathew) Member (Technical) */as 2 16