Delhi High Court
M/S. Teleecare Network (India) Pvt. ... vs Uoi And Ors. on 6 August, 2018
Bench: S. Ravindra Bhat, A.K. Chawla
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 06.08.2018
+ W.P.(C) 7853/2017
M/S. TELEECARE NETWORK (INDIA) PVT. LTD....Petitioner
Through: Sh. Jagdeep Dhankar, Sr. Advocate with Ms.
Priyanka Pariar, Ms. Asha Madan and Sh. Mukesh Jain,
Advocates.
Versus
UNION OF INDIA AND ORS. ......Respondents
Through: Sh. Sanjeev Narula, CGSC with Sh. Abhishek Ghai, Advocate.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A.K. CHAWLA MR. JUSTICE S. RAVINDRA BHAT %
1. This Court had on 30.07.2018 allowed the writ petition and made the following order:
"= Matter is remanded back.
The petitioner‟s claim that the limitation will not be bar has to be held.
The impugned order is hereby quashed. The refund application moved by the petitioner shall be decided on its merit, within ten weeks, in accordance with law.
The writ petition is disposed of."
2. The reasons for making the order were not discussed. However, in the meanwhile, the order itself was issued inadvertently to the parties. In these circumstances, the writ petition was listed today for directions.
3. Learned counsel for the parties reiterated their submission but at the same time agreed that the conclusions recorded were correct in the order W.P.(C) 7853/2017 Page 1 of 8 dated 30.07.2018. The present order proposes to discuss the facts and reasons for the said conclusions.
4. In these writ proceedings, the petitioner seeks a direction to quash the order of the Deputy Commissioner (Refund) dated 07.03.2017 and a further direction that the refund sought by it should be released.
5. The facts of the present case are that the petitioner imported mobile handsets during the period 26.03.2015 to 22.06.2015. During this period, it filed 103 Bills of Entries (hereinafter referred to as 'BoE') for import of mobile phones in India. It self-assessed duty, through ICEGATE [i.e. Indian Customs Electronic Data Interchange Gateway, an e-commerce portal of the Central Board of Excise and Customs (CBEC)]. It is submitted that ICEGATE provided no option to the Petitioner to avail the exemption under the concerned notifications; it consequently paid additional customs duty (commonly known as "CVD") leviable under Sections 3(1) and 3(5) of the Customs Tariff Act, 1975, @ 12.5%, though payable at 1%, classifying them under the relevant items of the Customs Tariff of Schedule 1 to the said Customs Tariff Act, 1975 (CTA). The Petitioner claims that it was made to pay the excess amount towards CVD @12.5% for imports of the mobile phones classified under CTI 8517 under mistake of fact and law that the duty payable was at 12.5%, being totally unaware of the fact that the Supreme Court had already declared the law in the case of M/s SRF Limited v Commissioner of Customs, Chennai 2015 (14) SCC 596 in terms of which it was eligible for availing the concessional rate of CVD at 1% in terms of Notification No. 12/2012- CE dated 17.03.2012 (as amended from time to time). The benefit of concessional rate was available subject to fulfilment of condition No.16 of the Notification which provided that the assessee should W.P.(C) 7853/2017 Page 2 of 8 not have taken credit in respect of the goods under the CENVAT Credit Rules, 2004 [hereafter "the Credit Rules"] in respect of the inputs and capital goods used in the manufacture of these goods. Before the law was declared by the Supreme Court in the case of SRF Limited (supra), the Revenue was consistently denying the benefit of the notification to assessees on the ground that no CENVAT Credit on inputs and capital goods was admissible under the Credit Rules to the assessee for manufacturing of mobile phones as the goods were not manufactured in India but were imported, therefore, condition No. 16 was not fulfilled as only those conditions could be satisfied which were capable of satisfaction.
6. It is submitted that following the judgment in the case of Ashok Traders v. Union of India 1987 (32) ELT 262 (Bom) of the Bombay High Court, it was held that the condition which could not be satisfied and had to be treated as not satisfied. In the case of SRF Limited (supra) decided on 26.03.2015, dealing with similar issue as to whether the assessee is entitled to the benefit of Notification No. 12/2012 CE, the Court held that the assessee was entitled to exemption from payment of CVD in view of the law already declared in the cases of Thermax Private Limited v. Collector of Customs (Bombay), New Customs House 1992 (4) SCC 440; Hyderabad Industries Ltd. v. UOI 1999 (5) SCC 15; AIDEK Tourism Services Private Limited v. Commissioner of Customs, New Delhi 2015 (7) SCC 429 that for quantification of additional duty in the case of import, it has to be imagined/presumed that the article imported had been manufactured or produced in India to examine what amount of excise duty was leviable. The condition of availing CENVAT was held to be irrelevant and furthermore, the presumption that such goods were manufactured in India and excise duty W.P.(C) 7853/2017 Page 3 of 8 leviable on it had to be drawn and then an ascertainment would be essential to determine the extent of CVD to which the importer would be entitled and the refund application were to be processed on the basis of the said principle. The demand of the CVD raised in the said cases was thus set aside.
7. It is stated that after the declaration of the law in SRF Limited (supra), in particular, the respondents have been giving the benefit of concessional rate of duty to others till the statutory amendment took place in Notification No.12/2012 as held in order dated 28.01.2016 passed in C/5l815 to 51874 and 51878 to 51899/2016 by CESTAT. The Petitioner complains that it has thus been subjected to discrimination. The petitioner states that since it merely imported the mobile phones and not manufactured them, it could not possibly have taken credit in respect of the said imported goods under the provisions of Credit Rules, 2004 as held by the Supreme Court in SRF Limited (supra). Thus, the Petitioner was eligible for the exemption from payment of CVD at enhanced rate; it claimed the refund application on 24.6.2016 claiming refund of extra amount paid towards CVD during the period of 26.03.2015 to 22.06.2015. The refund application of the Petitioner was accompanied by relevant documents. It is submitted that the Respondents had issued various deficiency memoranda to the Petitioner (its office letters dated 29.09.2016, 26.10.2016 and 11.11.2016). It is submitted that in its letter of 06.10.2016 the petitioner submitted detailed additional submissions and had disputed the fact that the claim was time barred under Section 27 of the Act. It was stated inter-alia as under:
"With respect to the eligibility of refund, we would like to submit that the Company has claimed refund of the amount deposited in excess of the actual duty payable on import of mobile phones. The amount paid in excess is not under any of W.P.(C) 7853/2017 Page 4 of 8 the provisions of the Act and cannot be termed as 'duty' paid or payable under this Act. Thus, provisions of Section 27 of Act shall not be applicable in the instant case. In this respect, we would like to draw reference from the decision of Hon'ble Supreme Court in the case of Union of India and Others vs. I. T.C. Limited, 1993Supp (4) SCC 326, wherein it has been held that any money which is realized in excess of what is permissible in law would be a realization made outside the provisions of the Act. Thus, any amount paid in excess of what was payable is outside the ambit of law."
8. The respondent Customs authorities, who resist the present proceeding for refund, claim that in terms of Section 128 of the Customs Act, 1962, any person aggrieved by any decision or order passed under the Customs Act by an officer of Customs lower in rank than a Principal Commissioner of Customs or Commissioner of Customs (in this case, the Assistant Commissioner of Customs) may appeal to the Commissioner (Appeals). The order dated 03.02.2017 falls well within the ambit of these provisions but the petitioner has chosen to directly approach this Court without exhausting the appellate remedy available. It is submitted, besides that the petitioner in the present petition has contended that excess duty was paid by it during the relevant time under the mistake of law and since the duty itself was not payable, the same shall not be hit by the bar provided under Section 27 of the Customs Act, 1962. In this regard the Revenue relies upon the law laid down by the Constitutional Bench of the Supreme Court in Mafatlal Industries Ltd. v. Union of India 1997 (89) ELT 247 (SC).
9. The Revenue points out that the petitioner paid the duty consciously and after deliberation; therefore, the deposit of amounts towards duty were not contrary to law. Therefore, consequent action had to be undertaken by it W.P.(C) 7853/2017 Page 5 of 8 within limitation prescribed under the Act. Its inaction in filing the refund application within the prescribed period of limitation as per Section 27 cannot be overlooked or even rectified since the said mistake needs to be corrected by filing within the period of one year from the date of payment only. The delay in filing of application for refund beyond the prescribed period of one year cannot be condoned by any adjudicating authority, appellate authority or tribunal.
10. In SRF Limited (supra), the company had imported Nylon Filament Yarn falling under Chapter 54 of the CTA and claimed NIL rate of additional duty of Customs/ Countervailing Duty (CVD) on account of serial No. 122 of Notification No. 6/2002-CE dated 01.03.2002. The Deputy Commissioner of Customs denied the benefit of the Notification on account of non-fulfilment of that condition that no CENVAT credit under Rule 3 or Rule 11 of the Credit Rules has been taken in respect of the inputs or capital goods used in the manufacture of Nylon Filament Yarn or Polypropylene Multifilament Yarn of 210 deniers with tolerance of 6 per cent. The importer appealed; the Supreme Court in its judgment relied on AIDEK (supra) as well as Thermax (supra). In AIDEK (supra), it was held that:
"15. The ratio of the aforesaid judgment in Thermax Private Limited (supra) was relied upon by this Court in Hyderabad Industries Ltd. (supra) while interpreting Section 3(1) of the Tariff Act itself; albeit in somewhat different context. However, the manner in which the issue was dealt with lends support to the case of the assessee herein. In that case, the court noted that Section 3(1) of the Tariff Act provides for levy of an additional duty. The duty is, in other words, in addition to the customs duty leviable under Section 12 of the Customs Act read with Section 2 of the Tariff Act. The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable W.P.(C) 7853/2017 Page 6 of 8 under Section 3(1) would be the excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation deals with the situation where „a like article is not so produced or manufactured‟. The use of the word „so‟ implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced or manufactured in India.
The words „if produced or manufactured in India‟ do not mean that the like article should be actually produced or manufactured in India. As per the explanation if an imported article is one which has been manufactured or produced, then it must be presumed, for the purpose of Section 3(1), that such an article can likewise be manufactured or produced in India. For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon"
11. Based on the judgment in AIDEK (supra) and having regard to the facts of the CASE, the Supreme Court allowed the appeal in favour of the importer and held that it was entitled to exemption from payment of CVD in terms of the Notification.
12. There is no dispute about the applicability of SRF Ltd (supra); indeed the Revenue's refrain during the hearing was that the amounts could not be refunded because the claims were time-barred and that the petitioner has an alternative remedy. This Court is of opinion that the plea of alternative remedy- an unoriginal and frequently used stereotypical defence by public bodies - in such cases at least dodges the crux of any dispute, i.e the liability W.P.(C) 7853/2017 Page 7 of 8 of the concerned public body or agency on merits. Sans any dispute with respect to facts, this Court finds it entirely unpersuasive, since Article 144 of the Constitution, compels all authorities to give effect to the law declared by the Supreme Court (as in this case, the SRF Limited judgment). The other plea which the Customs had relied on, to defeat the petitioner's refund application was Section 27 (3) which confines refunds to the situations contemplated in Section 27 (2), notwithstanding any judgment, order or decree of the court. This Court is at a loss to observe the relevance of that reasoning, given that SRF Limited (supra) had ruled in principle that import implied a deemed manufacture, without any corresponding obligation on the part of the importer to have availed CENVAT credit. As such, the amount claimed was not duty and could not have been recovered by the Customs authorities in the first instance, given the declaration of law in SRF Limited (supra). Therefore, they cannot now seek shelter under Section 27 (3) to resist a legitimate refund claim.
13. The impugned order is hereby quashed. The refund application moved by the petitioner shall be decided on its merits, within ten weeks, in accordance with law. The writ petition is disposed of.
S. RAVINDRA BHAT (JUDGE) A.K. CHAWLA (JUDGE) AUGUST 06, 2018 W.P.(C) 7853/2017 Page 8 of 8