Custom, Excise & Service Tax Tribunal
M/S. Itc Ltd vs Cc, Visakhapatnam on 8 March, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 19/01/2011
Date of decision:..
Appeal No.C/799-811, 783, 784, 790, 791/07
(Arising out of Order-in-Appeal No.3 to 23/2007(V-II)(D)CUS dt. 4/9/2007 passed by CCE&C(Appeals), Visakhapatnam)
For approval and signature:
Honble Mr. M.V. Ravindran, Member(Judicial)
Honble Mr. P. Karthikeyan, 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. ITC Ltd.
M/s. Prathyusha Associates
M/s. Foods, Fats & Fertilisers Ltd.
M/s. Asia Pacific Commodities Ltd.
M/s. Shivnath Rai Harinarain(India) Ltd.
M/s. Al Gyas Exports Pvt. Ltd.
..Appellant(s)
Vs.
CC, Visakhapatnam
..Respondent(s)
Appearance Mr. A.K.S. Murthy, Mr. K.S. Ravishankar, Mr. T.Ramesh and Ms.Mona, Advocates for the appellants.
Mr. D.P. Nagendrakumar, Jt.CDR and Ms. Sudha Koka, SDR for the Revenue.
Coram:
Honble Mr. M.V. Ravindran, Member(Judicial) Honble Mr. P. Karthikeyan, Member(Technical) FINAL ORDER No._______________________2011 Per P. Karthikeyan These appeals are filed by the following parties assailing a common order of the Commissioner(Appeals) No.3 to 23/2007(V-II)(D)CUS dt. 4/9/2007, vide which he rejected the claims for refund of the appellants. The particulars of refund claimed by the parties are given below:-
Sl.No. Party name Amount 1 M/s. ITC Ltd.
Rs.6,40,998/-2
M/s. Prathyusha Associates Rs.6,40,998/-3
M/s. Foods, Fats & Fertilisers Ltd.
Rs.1,06,241/-4
M/s. Asia Pacific Commodities Ltd.
Rs.4,24,965/-5
M/s. Al Gyas Exports Pvt. Ltd.
Rs.6,02,170/-6
M/s. Shivnath Rai Harinarain (India) Ltd.
Rs.2,58,627/-
2. The common facts of the appeals are that appellants are exporters of rice and had paid cess of 0.5% ad valorem under Agricultural and Processed Food Products Export Cess Act, 1985 (APFPEC Act) on export of consignments of rice. The impugned exports had taken place in June, 2006. The APFPEC Act was repealed w.e.f. 1/6/2006. Under separate orders, the refund claims filed by agents of the exporters for cess paid were sanctioned by the original authority in terms of Section 27 of the Customs Act, 1962 (the Act). The Department challenged the orders of the original authority before the Commissioner(Appeals). It was submitted that the original authority had erred in holding that the principles of unjust enrichment did not apply to the impugned claims. Citing the judgment of the Apex court in the case of Solar Pesticides Vs. UOI [2000(166) ELT 401 (SC)], it was argued that the principle was attracted in all cases where incidence of duty had been passed on directly or indirectly to another person. As entered in the respective shipping bills, the FOB value realized by the exporter and reflected in the bank realization certificates, the FOB value realized was inclusive of the cess in dispute. The original authority had failed to examine the claims from unjust enrichment angle and had therefore arrived at an incorrect conclusion that the principles of unjust enrichment did not apply to the impugned refund claims. Before the Commissioner(Appeals), the assessee had submitted that there was nothing on record of the Department to show that the FOB value realized by the respective parties included the cess. The APFPEC Act stood repealed at the time the relevant exports were made and the cess was paid. A non-existent levy or tax could not be passed on. The appellants claimed that as per the contracts with their foreign buyers, they were liable to bear export duties, taxes etc. The invoice price was a composite price and it could be inferred that the duty burden had not been passed on. They raised this argument relying on a number of case laws.
3. The Commissioner(Appeals) found that the cess amount in question was borne by the agents on behalf of the exporters and that the exporters reimbursed the cess amount to the agents and in turn would have recovered the same by including it in the FOB value of the export goods. He found that the decision of the Tribunal in the case of Modipon Fibre Co. Vs. CCE, Ghaziabad [2004(173) ELT 168 (Tri. Del.)] is relevant in deciding the case. In the said decision, the Tribunal had observed that price was determined from cost of production, raw material, taxes and duty and no manufacturer would sell his goods at loss, though he may reduce profit margin to compete in the market in case of enhancement of duty.
4. As per the definition of FOB in the Incoterms, 2000, an International Chamber of Commerce Official Rules for the interpretation of trade terms, Free on Board (FOB) means that, the seller delivers when the goods pass the ships rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport.
A. The sellers obligation.
A6. Division of costs: The seller must, subject to the provisions of B6, pay i. All costs relating to the goods until such time as they have passed the ships rail at the named port of shipment; and ii. Where applicable, the costs of customs formalities necessary for export as well as all duties, taxes and other charges payable upon export. Therefore, the FOB price is inclusive of all costs to the seller and his profit/loss margin, if any, till the goods have passed the ships rail at the named port of shipment.
5. The Commissioner(Appeals) rejected the claim of M/s. ITC, one of the appellants, that their contract specified that export duties, taxes, levies present and future in the country of origin were on sellers account on the ground that the contracts submitted had been dated prior to 01/6/2006 when the APFPEC Act was repealed. He found that the FOB value in the shipping bill was inclusive of cess as entered in the shipping bill. All the exporters had failed to establish that they had compensated their buyers to the extent of cess amounts recovered. Realisation of full FOB value itself proved that incidence of cess had been passed on to the buyers. He set aside the impugned orders and allowed the appeals filed by the Department.
6. Appellants have raised several grounds seeking to vacate the impugned order.
6.1. M/s. Al Gyas Exports Pvt. Ltd. has submitted that the provisions of the Act relating to review and appeal were not made applicable to the APFPEC Act. Provisions of Section 128 and 129D(2) were not adopted for the said APFPEC Act. As the APFPEC Act was repealed on 1/6/2006, proceedings initiated under the said Act subsequently were without authority of law. The review order against order of the original authority was barred by limitation as the same had been passed after 6 months from the date of speaking order. The appellant had not recovered the cess from the buyer and had borne the same by paying it as a percentage of FOB value. The assessee relied on the following case laws:-
a. Ahmed Khan & Sons Vs. CC, Calcutta [2001(132) ELT 764 (Tri. Kolkata)] In this decision, the Tribunal held that the cess collected on export of Hookah Tobacco paste without authority of law had to be considered as a deposit. The refund claimed could not be rejected as the collection of cess was without the authority of law. The refund claims were outside the scope of Section 26 and 27 of the Customs Act, 1962.
b. Heavy Engineering Corporation Ltd. Vs. UOI [2004(167) ELT 396 (Ca.)] In this judgment, a Single judge of the Honble High Court of Calcutta held that the limitation prescribed under Section 27 of the Act did not apply to refund of excess customs duty collected on import of HR plates by mistake. The appellant therein was directed to approach the Tribunal which would deal with the application as an appeal and decide the issue on merits.
c. Doctor Beck & Co. (India) Ltd. Vs. Assistant Collector [1991(51) ELT 263 (Bom.)] affirmed by Honble Supreme Court reported at 1998(98) ELT A71 (SC).
The High Court had held that plea of limitation was not available to the Department in view of the finding of the Assistant Collector that duty had been paid under mistake of law. Refunds could not be rejected on the ground of unjust enrichment unless the Department could establish that tax burden had been shifted to the customers. Their lordships noted that in the case of New Industries Ltd. Vs. UOI [1990(46) ELT 23 ] a full Bench of the High Court had decided that it was necessary for the court to ascertain that tax burden had been shifted by the assessee and it was for the Department to establish that the tax burden had been shifted by the assessee to the customers.
It is submitted that in the case on hand this requirement was not met by the Department.
d. Hind Agro Industries Ltd. Vs. CC [2008(221) ELT 336 (Del.)] In this case, the Delhi High Court vacated an order of the Tribunal sustaining rejection of claims for refund of cess on meat products erroneously paid by the appellants therein as barred by limitation. The court held that there was no question of processing a claim for refund of erroneously paid cess in terms of the Customs Act. The High Court ordered grant of refund along with interest.
6.2. In the appeals filed by M/s. ITC Ltd., the following grounds are raised:-
a. Notice for recovery of the refund already sanctioned was issued only to the CHA. As per several judicial authorities for instance CC Vs. Trivandrum Rubber Works Ltd. [1999(106) ELT 9 (SC)], service of demand notice on CHA was not a valid service on the assessee.
b. The Department had collected the disputed cess without the authority of law.
c. The effect of repeal of APFPEC Act is as if the said act never existed.
d. The cess collected from the appellant was liable to be refunded.
e. The impugned order had been passed on conjectures.
f. The Revenue had filed only one appeal in the case of the assessee instead of seven as there were seven Orders-in-Original sanctioning refund.
g. The original authority had examined the aspect of unjust enrichment though the impugned order found to the contrary.
h. The contracts of the assessee with its buyers showed that export duties and levies would be borne by the appellant. The finding to the contrary was erroneous.
i. The definition of FOB in Incoterms, 2000 relied upon by the Commissioner(Appeals) supports the case of the appellant.
j. The assessee relied on the decision of the Tribunal in the case of Ahmed Khan & Sons (supra) and, the judgment of the Apex court in the case of U.P. Pollution Control Board Vs. Kanoria Industrial Ltd. [2001(128) ELT 3 (SC)] wherein it was held that refund was not deniable when tax was collected without the authority of law.
k. The finding of the Commissioner based on definition of FOB in Incoterms, 2000 that FOB price was inclusive of all costs to the seller was bereft of merit.
l. Before and after repeal of the Cess Act, the FOB price remained the same. The Commissioner(Appeals) erred in ignoring the clauses in the contract on the ground that the contract was dated prior to 01/06/2006. The contracts covering 6 shipping bills provided that export duties and levies were to be borne by the appellant. Department has not adduced any evidence to the contrary.
m. The Commissioner(Appeals) had placed wrong reliance on Solar Pesticides case since the said decision applied where refund claim was of duty. Moreover the facts were dissimilar. The Assistant Commissioner had not been authorized to file appeal on this ground by the CCE, Visakhapatnam.
n. As the amount claimed was not duty as per the Customs Act, the provisions applicable to duty of customs should not be applied to claim for refund of cess under APFPEC Act repealed w.e.f. 01/06/2006.
o. The impugned order wrongly ignored the submission relying on Article 265 of the Constitution which mandated that no tax shall be levied or collected except by authority of law.
p. The amounts collected without authority of law are to be refunded and cannot be retained with the Department.
q. The Commissioner(Appeals) had not appreciated the law of agency. An agent acted on behalf of principal and the acts of the agents were binding on the principal. It was erroneously held that the appellant had not produced evidence of having paid the agents the amounts of cess paid by them.
r. It was against Dharma for the public authorities to retain peoples money after discovering that the same amounted to erroneous levy as held by the Apex Court in the case of Shiv Shankar Dal Mills Vs. State of Haryana [AIR 1980 SC 1037]. The impugned order was therefore bad in law.
s. Reliance is also placed on the decision in Embarkation Headquarters Vs. Collector [1985(20) ELT 53 (T)] and HMM Ltd. Vs. Administrator, Bangalore City Corporation [1997(91) ELT 27 (SC)] which held that refund was not deniable when the realization of tax or money was held to be without authority of law.
t. As held in CCE Vs. Pawan Tyres Private Ltd. [2000(126) ELT 1061 (T)], when the invoice showed composite price and duty was not indicated separately, the incidence of duty was not passed on to the buyers.
6.3. In the written submissions dt. 19/01/2011 furnished subsequent to hearing, it is submitted that the argument of Revenue that the appellants had to challenge the assessment to claim refund was bereft of merit because there was no valid and legal assessment but an electronic shipping bill clearance through a machine-interface and let exports were allowed only after cess was paid. There could have been no assessment of repealed levy. The Departments reliance on the Apex Court judgment in Priya Blue Industries [2004(172) ELT 145 (SC)] was mis-placed. Considering that there was an assessment, the same was contested by filing refund claim; challenge to the assessment could be by seeking refund / re-classification also, as held by Supreme Court in Karnataka Power Corporation Ltd. Vs. CC(A) [2002(143) ELT 482 (SC)]. The CBEC circular No.18/08-Cus relied on by the ld. Jt.CDR was not in existence at the time of impugned export.
6.4. M/s. Asia Pacific Commodities Ltd. and M/s. Foods, Fats and Fertilisers Ltd. have raised the following common grounds:-
a. The appellants were forced to pay the cess amount leviable under an Act that was not in force at the time of filing of the shipping bills. The original authority had correctly held that no unjust enrichment was involved in refunding the impugned amounts. The appellants relied on CC, Bangalore Vs. Ken Agritech Pvt. Ltd. [2004(166) ELT 339 (Tri. Bang.)], a stay order which held that provisions relating to unjust enrichment applied to Section 27 and not to refund of export duty under Section 26 of the Act.
b. They relied on the Tribunals decision in the case of CC, Bangalore Vs. Ken Agritech Pvt. Ltd.. In this decision, the Tribunal had held that Section 27 of the Act applied for refund of cess collected under APFPEC Act by virtue of sub-section 3 of Section 3 of the said Act which had made, inter-alia, provisions relating to refunds in the Customs Act applicable to levy and collection of cess under the APFPEC Act. The Tribunal also observed that the Supreme Court in the case of Mafatlal Industries Ltd. Vs. UOI [1997(89) ELT 247 (SC)] had held that Section 27 of the Customs Act contained machinery for refund of amount wrongly collected and the same had to be refunded within the provisions of Act.
c. In the case of CCE, Hyderabad-III Vs. Kumar Metallurgical Corporation Ltd. [2008(221) ELT 519 (Tri. Bang.)], it was held that duty element shown in invoice did not mean that the duty was passed on to the buyer. When excess duty was not payable on the goods involved, contracted price did not include the duty. The respondent M/s. Kumar Metallurgical Corporation Ltd. was held eligible for refund and unjust enrichment was held to be not involved.
6.5. In the appeal filed M/s. Shivnath Rai Harnarain (India) Ltd., the appellant relied on its contract with the buyer which provided that the seller unconditionally guaranteed that all the necessary and required export licenses and taxes, present and future were to sellers account and that the FOB value did not include cess. Therefore, no unjust enrichment entailed in granting the impugned refund. The retention of amount collected without the authority of law was contrary to Article 265 of the Constitution of India. They relied on the judgment of the Supreme Court in the case of D. Cawasji & Co. Vs. State of Mysore [1978(2) ELT (J 154) SC] where it was held that tax paid under mistake of law had to be refunded irrespective of the time when tax had been paid provided the writ petition or the suit for the purpose was filed within three years from the discovery of the mistake. Refund could not be rejected on the ground of unjust enrichment.
In the case of Calcutta Paper Mills Manufacturing Co. Vs. CEGAT & Others [1986(25) ELT 939 (Cal.)], it was held that the ground of unjust enrichment as a defence against the claim of restitution had been rejected by the various High Courts and the Supreme Court on the ground that the duty was collected without the authority of law was refundable even though it was recovered from the customers and manufacturers and granting relief of refund may result in unjust enrichment. Theory of unjust enrichment could not be invoked in a case of refund of excise duty recovered from the manufacturer without the authority of law.
In the case of Parle Products & another Vs. UOI & another [1987(30) ELT 180 (Bom.)], the High Court held that refund of duty paid under mistake of law not unjust and the manufacturer was not under an obligation to return the same to the customer from whom it was recovered.
7. Canvassing the case of the Revenue, the ld. Jt.CDR has submitted that all refunds of duty are governed by the provisions of Section 27 of the Act as held in the case of Microland Ltd. Vs. CC, Bangalore [2006(206) ELT 262 (Tri. Bang.)]. He has relied on the following case laws:-
a. Ken Agritech Pvt. Ltd. [2004(175) ELT 227 (Tri. Bang.)] The Tribunal had held that provisions of Section 27 of the Act were applicable for refund of cess paid on export of Gherkins under APFPEC Act.
b. Solar Pesticide Pvt. Ltd. [2000(116) ELT 401 (SC)] When the whole or part of the duty incurred on import of raw material was passed on to another person then the application for refund of such duty would not be allowed under Section 27(1).
c. Allied Photographics India Ltd. [2004(166) ELT 3 (SC)] Uniformity in prices before and after assessment did not lead to inevitable conclusion that incidence of duty had not been passed on to buyer as such uniformity may be due to various factors.
d. Sahakari Khan Udyog Mandal Ltd. [2005(181) ELT 328 (SC)] The Apex court held that before claiming a refund, the appellant has to show that he had paid the amount for which relief was sought and he had not passed on the burden to the consumer and if such relief is not granted, he would suffer loss. Doctrine of unjust enrichment based on equity could be invoked to deny the benefit of which a person is not otherwise entitled irrespective of applicability of Section 11B of Central Excise Act, 1944.
e. Gujarat Co.-op. Milk Marketing Federation Ltd. [2007(220) LET 914 (Tri. Ahmd.)] Export goods required to be subjected to assessment and Section 17 of the Act applicable to export goods also. Impugned order upheld rejection of refund claim of cess paid in pursuance of assessment though incorrect.
f. Rice India [2009(237) ELT 50 (Tri. Mum.)] Sugar cess was held not leviable on imported sugar and hence refund claim filed in respect of sugar cess so paid. As Sugar Cess Act itself was not declared unconstitutional, refund claim had to pass the test of unjust enrichment.
g. LMJ International Ltd. [2004(178) ELT 643 (Tri. Kol.)] Refund claim pertaining to cess under Agricultural Produce Cess Act, 1940 also governed by the Customs Act, 1962. Appellants claim that refund claim not governed by Section 27 rejected.
h. Microland Ltd. [2006(206) ELT 262 (Tri. Bang.)] The Tribunal held that every refund has to be examined from unjust enrichment point at all time from the date of amending provisions relating to refund under the Customs Act.
i. Modipon Fibre Co. [2004(173) ELT 168 (Tri. Del.)] The Tribunal held that the assessee cannot be allowed gains from Government and customers.
j. Priya Blue Industries [2004(172) ELT 145 (SC)] The Supreme Court held that without assessment order having been modified in appeal or reviewed, a claim for refund cannot be maintained.
Ld. Jt.CDR also placed relied on para 137 of the Apex Courts judgment in the case of Mafatlal Industries (supra).
8. We have examined the case records and carefully considered the submissions made by the parties. The impugned order relied on the definition of FOB value in Incoterms, 2000 to hold that the same included the cess under the APFPEC Act and the appellants recovered the same from its buyers. Therefore, the disputed claims for refund were hit by the principle of unjust enrichment. We find that the definition relied on by Commissioner(Appeals) reads as under:-
the seller delivers when the goods pass the ships rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport.
B. The sellers obligation.
A6. Division of costs: The seller must, subject to the provisions of B6, pay iii. All costs relating to the goods until such time as they have passed the ships rail at the named port of shipment; and iv. Where applicable, the costs of customs formalities necessary for export as well as all duties, taxes and other charges payable upon export. 8.1. We find that from the above definition it is not possible to arrive at a definite conclusion that the FOB value includes the cess paid on export of rice especially in cases where the contract with the foreign buyer specifically provided that the export duty / taxes etc. were to the account of the seller. In all the cases except in the case of M/s. Al Gyas Exports Pvt. Ltd., the appellants have furnished copies of the relevant contracts containing the above clause. Unless the Department is satisfied on examination of the documents showing remittance received by the appellants, the finding in the impugned order that the FOB value recovered included the impugned cess cannot be sustained. As it is, there is no reliable finding in the impugned order to conclude that the disputed cess amounts had been recovered as part of the FOB value. The appellant M/s. Al Gyas Exports Pvt. Ltd. has raised certain legal issues as regards the applicability of provisions relating to review and appeal in the Act in respect of cess levied under APFPEC Act. This appellant also raised another objection that the review orders were passed beyond the time allowed under the Act.
9. We find that in the Sahakari Khand Udyog Mandal Ltd. case (supra), the Apex Court made the following observations:-
31.?Stated simply, Unjust enrichment means retention of a benefit by a person that is unjust or inequitable. Unjust enrichment occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.
32.?The doctrine of unjust enrichment, therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of unjust enrichment arises where retention of a benefit is considered contrary to justice or against equity.
33.?The juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or the doctrine of restitution.
34.?.. . .
35. .. .
36.?The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment.
37.?In Orient Paper Mills Ltd. v. State of Orissa, (1962) 1 SCR 549, this Court did not grant refund to a dealer since he had already passed on the burden to the purchaser. It was observed that it was open to the Legislature to make a provision that an amount of illegal tax paid by the persons could be claimed only by them and not by the dealer and such restriction on the right of the dealer to obtain refund could lawfully be imposed in the interests of general public.
38. .... .
39. .. ..
40. ...
42. . .. .
43.?The law laid down in Orient Paper Mills Ltd. and Amar Nath Om Prakash was quoted with approval by this Court in Mafatlal Industries Ltd.
44.?In M/s. Shiv Shankar Dal Mills v. State of Haryana, (1980) 2 SCC 437, market fee was collected under the provision which was struck down by this Court in an earlier case. A prayer was, therefore, made by the traders to refund the amount collected from them. This Court held that though collection of market fee from the traders was illegal but traders could demand only such amount that had not passed on to the customers. For that view, the Court referred to Articles 38 and 39 of the Constitution as also discretionary nature of the power under Article 226 of the Constitution. Following Nawabganj Sugar Mills Co. Ltd. v. Union of India, (1976) 1 SCC 120 : (1976) 1 SCR 803, the Court devised a scheme providing for refund of amounts to those from whom illegal collections had been made by traders.
45.?In Mafatlal Industries Ltd. also, this Court held that refund of tax/duty wrongfully paid can be claimed on the basis of doctrine of equity and a person demanding such restitution must plead and prove that he had paid such tax/duty and had suffered loss/injury. The burden is on the petitioner to prove that the tax/duty paid by him is not passed on to customers or third party and that he is entitled to restitution.
46.?A reference may also be made to a recent decision of the Constitution Bench in Godfrey Phillips India Ltd. & Another v. State of U.P. & Ors., Writ Petition (c) No. 567 of 1994, dated January 20, 2005. In that case, constitutional validity of Uttar Pradesh Tax on Luxuries Act, 1995 as also other State Acts was challenged inter alia on the ground of legislative competence of the State Legislatures. The Court allowed the petition and held that the State Legislatures were not competent to impose luxury tax on tobacco and tobacco products and the Acts were declared ultra vires and unconstitutional. In the intervening period, however, tax was collected by the appellants from consumers and also paid to the State Governments. In certain cases, interim relief was obtained by the appellants from this Court against recovery of tax and as alleged by the State Governments, the appellants continued to charge tax from consumers/customers.
47. ..
48.?From the above discussion, it is clear that the doctrine of unjust enrichment is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss.
The above observations made by a three Member Bench of the Apex Court make it clear beyond doubt that even in the absence of statutory provision to deny benefit of refund of an erroneous levy when passed on to customer, refund of the same cannot be allowed. It is imperative that the assessee establishes that the relief sought was not passed on to others to qualify for the refund.
10. In the Priya Blue Industries case (supra), the Apex Court made the following observations on refund of excess duty paid pursuant to an order of assessment under Section 27:-
6.?We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India)s case (supra). 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.
The mandate handed down by the Apex Court is that no refund can be allowed in the absence of successful challenge to a completed order of assessment.
11. In all the cases of refund involved in the impugned order, no appellant has a case that the assessment on the shipping bills involved was successfully challenged. The plea of the appellants that the impugned payments did not follow assessment cannot be countenanced. Revenue has rightly relied on the decision of the Tribunal in the Gujarat Co.-Op. Milk Marketing Federation Ltd. case (supra). We note that the Tribunal had made the following observations:-
7.?As regards the submission that no assessment per se is done in respect of export consignments the same is not acceptable. The definition of many terms in the Customs Act like duty, assessment, prohibited goods, value, refers to both imported and export goods. In particular, Section 17 clearly deals with the assessment of both imported goods as well as export goods. Therefore, I hold that the exported goods are required to be subject to assessment. In the present, the cess has been paid only in pursuance of an assessment order. It was not a case of no assessment but a case on incorrect assessment leading to consideration refunds.
8.?Having held that there is assessment for exported goods the next issue for consideration is whether the ratio of the Honble Supreme Court in the case of M/s. Priya Blue will only apply to assessment in relation to imported goods and also to exported goods. There is no warrant to restrict the application of the ratio of the Honble Supreme Court only in respect of imported goods as the issues like assessment, refund are common in respect of both imported goods as well as exported good.
12. As regards the objection raised by M/s. ITC Ltd. that the Department had filed only one appeal instead of six considering the orders-in-Original (including one corrigendum), we note that the Act does not bar a person aggrieved by a number of decisions of an officer of Customs lower in rank than a Commissioner of Customs filing a single appeal to the Commissioner(Appeals). We note that the challenge to the impugned order raised by M/s. ITC Ltd. on the ground mentioned at a of para 6.2 above is met by the submission by the appellant at q of the same sub-para. As regards the challenge raised by M/s. Al Gyas Exports Pvt. Ltd. that the APFPEC Act did not adopt provisions in the Act covering review, appeal etc. of Section 128 and 129D(2) of the Act, we note that the relevant provisions of Section 3 of the APFPEC Act reads as follows:-
3. Duties of Customs on Scheduled products:-
(1) There shall be levied and collected by way of a cess for the purposes of the Agricultural and Processed Food Products Export Development Authority Act, 1985, a duty of customs at such rate not exceeding three per cent ad valorem as the Central Government may, by notification in the Official Gazette, specify, on all Scheduled products, which are exported.
(2) The duties of customs levied under sub-section (1) on the Scheduled products shall be in addition to any cess or duty leviable on such Scheduled products under any other law for the time being in force.
(3) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder including those relating to refunds and exemptions from duty, shall, as far as may be, apply in relation to the levy and collection of the duty of customs leviable under sub-section (1) as they apply in relation to the levy and collection of duties of customs under that Act or those rules and regulations. There is no dispute that provisions in the Act pertaining to levy, collection, refund etc. apply to levy, collection, refund etc of cess levied under the APFPEC Act. As provisions relating to levy and collection are borrowed, the provisions relating to short levy, short payment, concomitant disputes and the remedies provided in Section 128 and 129 D(2) of the Act should also be held to have been borrowed for the purpose of APFPEC Act by virtue of the above sub-section. Therefore, we reject the objection raised by M/s. Al Gyas Exports Pvt. Ltd.
13. As regards the claim that a refund claim for excess duty paid can be validly made without challenging assessment under the act relying on the judgment of the Apex Court in the case of Karnataka Power Corporation Ltd. Vs. CC(Appeals) [2002(143) ELT 482 (SC)], we note that a Larger Bench of the Tribunal had considered the ratio of the above decision and the decisions of the Apex Court in Flock India case and Priya Blue Industries case and held that a refund claim was not maintainable unless the assessment order in pursuance of which duty paid was challenged and modified / set aside. In the case of Maharashtra Cylinders Pvt. Ltd. Vs. CESTAT, Mumbai & Ors. reported as 2011 (183) ECR 0059 (Bom.), the Honble High Court of Bombay has observed as follows:-
8.. .. .The Apex Court in the case of Priya Blue Industries Ltd. Vs. Commissioner of Customs (Preventive) AIR 2004 SC 5115:2004(172) ELT 145 (SC) has held that validity of an assessment cannot be considered while dealing with the refund claim. The said ratio would apply to the self assessment as well. In view of these binding authorities, we reject the arguments of the appellants relying on the judgment of the Apex Court in the case of Karnataka Power Corporation Ltd. (supra).
14. As regards the challenge to the impugned order for the reason that the appeal disposed by it had been filed following review initiated after the period prescribed, we observe that this ground concerns facts. This ground is taken first before us in the proceedings. The ground is not substantiated with details of the relevant dates, etc. Moreover, the assessee had participated in the proceedings before the Commissioner (Appeals) without raising this objection. In the circumstances, we reject the challenge to the impugned order raised by M/s. Al Gyas Exports Pvt. Ltd.
15. All the appeals are rejected.
(Pronounced in court on ..) (P.KARTHIKEYAN) MEMBER (TECHNICAL) (M.V. RAVINDRAN) MEMBER (JUDICIAL) Nr 23