Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri G. Jha, A.R on 7 November, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : C/12058/2013 [C/Cross/12967/2013] Arising out of : OIA-60/COMMR-A/JMN/2013 dated 26.03.2013 Passed by : Commissioner (Appeals) Customs, , Jamnagar For approval and signature : Honble Mr. H.K. Thakur, Member (Technical) 1 Whether Press Reporter 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 Appellant (s) : Commissioner of Customs (Prev.), Jamnagar Represented by : Shri G. Jha, A.R. Respondent (s) : M/s. Kin Ship Services Pvt. Limited
Represented by : None CORAM :
Honble Mr. H.K. Thakur, Member (Technical) Date of Hearing / Decision : 07.11.2014 ORDER No. A/11880/2014 Dated 07.11.2014 Per : Mr. H.K. Thakur;
This appeal has been filed by the Revenue against OIA No. 60/COMMR-A/JMN/2013 dated 26.03.2013, on the ground that the relevant bill of entry was filed by the Respondent at the time of conversion of vessel from foreign run to costal run, which was finally assessed on 21.4.2011 by paying duty of Rs. 90,85,381/- and that refund was not admissible.
2. When the case was called out for hearing, none appeared on behalf of the respondent. Shri G. Jha (AR) appearing on behalf of the Revenue argued that refund filed by the respondent was not admissible because bill of entry was finally assessed. That as per the following case laws, refund was also not admissible to the respondent once the assessment made on the bills of entry were not challenged:-
(a) CC,(Imp.), Nhava Sheva vs. Eurotex Indus & Export Limited - [2007 (216) ELT 137 (Tri. LB)]
(b) Priya Blue Industries Limited vs. Commissioner of Customs (Prev.) 2004 (172) ELT 145 (S.C.)]
(c) J.M. Baxi & Company vs. Commissioner of Customs, Ahmedabad [2009 (237) ELT 305 (Tri. Ahmd.)]
3. It is the case of the Revenue that as per CBEC Circular No. 58/97 dated 06.11.1997, the assessments are required to be made provisionally and only on finalisation of such provisional assessments, a person is entitled to refund claim. It was strongly argued by the learned AR that respondent has never asked for any provisional assessment of the bill of entry and that Respondent decided to pay the entire leviable Customs duty, which was assessed finally on the bill of entry. That as per CBEC Circular 58/97 dated 06.11.1997 even if estimated quantity of goods, consumed during the costal run, is taken for payment of duty then also the assessment has to be made provisionally. It was thus argued that the order passed the first appellate authority should be dismissed and departments appeal should be allowed.
4. In the cross-objection, C/Cross/12967/2013 filed by the respondent it was agitated that in the appeal filed before the first appellate authority the point of law has been correctly appreciated.
5. Heard the learned AR and perused the case records. A short point involved in these proceedings is whether the refund claim can be entertained when the person asking for refund has not challenged the assessments made finally on the bills of entry. As per the facts of the case stated by the first appellate authority in Para 9 of the Order-in-Appeal dated 26.3.2013, the bill of entry filed by the respondent was assessed finally on 21.4.2011 and the entire duty of Rs. 90,85,381/- was paid. In the same paragraph, first appellate authority without recording any reason held that difference so paid should be treated as provisional assessment. It is observed from the CBEC Circular No. 58/97 dated 06.11.1997, that assessment at the time of conversion from foreign run to costal run of a vessel should be made provisional. Para- 1 to 3 of this Circular dated 06.11.1997 are reproduced below:-
1. I am directed to refer Boards Circular F. No. 433/1/81-CUS. IV, dated 22-1-1985 on the above subject. In view of representations made by the Indian National Shipowners Association from time to time and the references made by commissioners of Customs, the procedure relating to recovery of duty on ship stores consumed by foreign going vessels during their temporary reversion into coastal run has been reviewed.
2. It has been observed that the work relating to assessment and collection of duty on ship stores consumed during temporary reversion to coastal run is not being given due attention. It has resulted in accumulation of backlog at all the ports. The Comptroller and Auditor General of India has also pointed out lapses in recovery of duly on ship stores in its report. It has also been observed that the instructions contained in Boards Circular, dated 22-1-1985 are not being followed uniformly. The duty has not been collected at the time of reversion of vessel from foreign run to coastal run, and even after the reconversion of vessel from coastal to foreign run the assessment are kept pending for want of the inventory list of ship stores from the port at which the vessel reverted to foreign run. This has resulted in assessments remaining unfinalised, and even when finalised, the steamer Agents have showed no urgency to honour their duty liability despite the Bonds furnished by them.
3. Therefore in modification of existing procedure, it has been decided that if the Steamer Agents do not desire to pay duty on the entire quantity of Bonded stores carried by the ship, it is open to them to take the estimated quantity out of the Bonded stores and pay duty on the same. The remaining quantity may remain on board such vessels in terms of Section 86 of the Customs Act, 1962. The duty on stores like alcoholic liquor, cigarettes, etc. (other than liquid cargo like diesel, furnace oil, etc.) may be recovered on quantity likely to be consumed during coastal run, and remaining quantity may be kept in bond under Customs seal as per procedure laid down under the Imported Stores (Retention on Board) Regulations, 1963. The Steamer Agents are required to file the Bill of Entry as soon as the conversion takes place, and the assessment would be completed and duty collected within 7 days of the date of conversion to coastal run.
The duty on bunkers like diesel, furnace oil, etc., may be recovered at 110% (one hundred and ten per cent.) of the duty leviable on the quantity estimated to be consumed during the coastal run at the time of conversion from foreign run to coastal run on provisional assessment basis. The steamer agent may file refund claim if any to get refund of duty at the time of reconversion from coastal to foreign run. The assessment may be finalised within 15 days of reconversion from coastal to foreign run.
6. It is evident from the opening Para of this Circular that before issue of Circular dated 06.11.1997, another Circular dated 22.1.1985 was existing. Para -2 of the circular dated 06.11.1997 highlights the lapses pointed out by the CAGs audit regarding assessments made with respect to such conversions of vessels from foreign run to costal run. As a modification to the exisitng Circular an alternative method of duty payment on the ships stores etc., required to be consumed during the costal run, was extended to the importers. However, assessment with respect to duty paid on estimated quantity of ship stores consumed in costal run was also required to be made provisionally. In the light of prescribed procedure respondent was required to keep on record the fact that vessel after running on coastal run for some time will again taken out for foreign run and that appellant will be seeking refund claim of the excess duty paid. In the absence of compliance with the prescribed procedure, it can not be said that duty assessments made on the bill of entry were provisional. Findings recorded by the first appellate authority to that extent are not legally correct. Once it is held that assessments made by the Revenue on the bills of entry were final then the judgments relied upon by the learned AR become relevant. In the case of Priya Blue Industries Limited (supra), it has been held by the Apex Court that refund claim contrary to the assessment orders is not maintainable without that order of assessment being modified in appeal.
7. In view of the above findings, the order passed by the first appellate authority is required to be set-aside. Accordingly, appeal filed by the Revenue is allowed and cross-objection filed by respondent is rejected.
(Operative part of the order pronounced in the Court) (H.K. Thakur) Member (Technical) .KL 3