Custom, Excise & Service Tax Tribunal
Basf India Limited vs Ce & Cgst Noida on 7 June, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Customs Appeal No.70059 of 2020
(Arising out of Order-in-Appeal No.NOI-CUSTM-000-APP-1080-19-20 dated
05/11/2019 passed by Commissioner (Appeals) Customs, Central Goods &
Services Tax, Noida)
M/s BASF India Ltd., .....Appellant
(3rd Floor, Shree Sawan Knowledge Park,
D-507, MIDC, Turbhe Navi Mumbai-400705)
VERSUS
Commissioner of Customs (Import), Noida ....Respondent
(4th Floor, C-56/42, Renu Towers, Sector-62, Noida-201301) APPEARANCE:
Shri Atul Gupta, Advocate for the Appellant Shri Manish Raj, Authorised Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70328/2024 DATE OF HEARING : 08 February, 2024 DATE OF PRONOUNCEMENT : 07 June, 2024 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.NOI- CUSTM-000-APP-1080-19-20 dated 05/11/2019 passed by Commissioner (Appeals) Customs, Central Goods & Services Tax, Noida. By the impugned order, Commissioner (Appeals) has held as follows:-
"12. Thus, in the light of the above discussion and findings, appeal bearing No. 970/CUS/Noida/Appl/NCUS/2018-19 dated 17.08.2018 filed by M/s BASF India Ltd., 3rd Floor, Shree Sawan Knowledge Park, Plot No.D-507, MIDC, Turbhe, Navi Mumbai-400405 against Memorandun Order Customs Appeal No.70059 of 2020 2 No.81/EDD Refund/ICD-Dadri /2018 dated 15.06.2018 is rejected and impugned order is upheld."
2.1 Appellant filed a refund claim amounting to Rs.57,40,416/- on 01.05.2018 under Section 27 of Customs Act, 1962 in compliance to SVB Order dated 16.03.2015 on the ground that they had deposited EDD at the time of importation of goods. 2.2 Original Authority vide order dated 15.06.2018 rejected the refund claim filed by the appellant. 2.3 Aggrieved appellant have filed appeal before Commissioner (Appeals), who vide the impugned order referred in para-1 above rejected the appeal filed by the appellant. 2.3 Aggrieved appellant have filed this appeal. 3.1 We have heard Shri Atul Gupta learned Counsel appearing for the appellant and Shri Manish Raj learned Authorised Representative appearing for the revenue. 3.2 Learned Counsel appearing for the appellant submits that- The amount which was deposited lying as security to be adjusted towards duty, as the SVB accepted the value declared and the security deposit was not adjusted towards any duty at any time, the provisions of refund of duty would not be applicable to refund of security amount. The amount was deposited in terms of CBEC instructions was not a duty paid provisionally, but the security deposit for provisional assessment.
In terms of provisions of Section 18(2), the refund is required to be granted where the amount deposited in excess.
3.3 Learned Authorized Representative reiterates the findings recorded in the orders of the lower authorities.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For rejecting the refund claim file by the appellant, Commissioner (Appeals) in the impugned order recorded the following findings:-
Customs Appeal No.70059 of 2020 3 "6. I have carefully gone through the facts of the case, appeal memo including the grounds of appeal, submission made by the appellant both oral as well as written and relevant provisions of the Act. I find that the appellant had deposited 1% EDD amounting to Rs.57,40,416/- for the purpose of imports goods as the appellant was deemed to be related to their foreign supplier in terms of Rule 2(2) of the Customs Valuation (Determination of value of Imported Goods) Rules, 2007. The department referred the matter to SVB Mumbai for investigation and assessed the Bills of entry provisionally after getting deposited of 1% EDD amounting to Rs.57,40,416/- till the finalization of transaction value by the SVB, Mumbai. The above deposits represented provisional payment of duty and all the assessments were made provisionally. The Assistant Commissioner, SVB, Mumbai passed the aforesaid SVB Order No.1322/AC/SVB/AB/DAB/2014-15 dated 16.03.2015 in the matter and accordingly. Competent authority of Customs House Noida finalized the bill(s) of entry in the month of November 2016 and January 2017.
7. I observe that the appellant in their grounds of appeal has alleged that the Bill(s) of entry have been finalized in violation of the principles of Natural Justice. I find that there is no provision of issuance of show cause notice or granting any opportunity of personal hearing before the finalization of the provisional assessments under Section 18 of the Customs Act'1962. Further, aforesaid Bills of entry were finalized by the competent authority in compliance to the SVB Order No.1322/AC/SVB/AB/DAB/2014-15 dated 16.03.2015, which was very well in the knowledge of the appellant. If the aforesaid SVB order dated 16.03.2015 was not acceptable to them, they could have preferred an appeal before the competent authority or have informed in writing to the Jurisdictional Customs Authority requesting not to finalize their provisional Bill(s) of entry. Further, nothing Customs Appeal No.70059 of 2020 4 had been submitted by the appellant at the time of filing of their refund claim with the department that the aforesaid Bill(s) of entry were finalized without their knowledge. The case laws cited by the appellant is not relevant in their present case as the final assessment of the Bills of entry had been finalized by the Competent authority in the light of SVB Order dated 16.03.2015. I do not find any force in the contention of the appellant.
8. I observe that the appellant has raised the question in their grounds of appeal in respect of applying the period of limitation as prescribed in terms of Section 27 of Customs Act'1962 as the same will not be applicable in their case. I find that it is an admitted fact that the present refund claim was filed by the appellant under Section 27 of Customs Act' 1962. In his application dated 01.05.2018, the appellant submitted that "We wish to lodge this claim for refund of extra duty deposit under Section 27 of Custom Tariff Act in pursuance of SVB Order File No.5/9-
139-GATT GVC & Order No 1322/AC/SVB/AB/DAB/2014-15 dated 16.03.2015", hence applicability of Section 27 of Customs Act' 1962 is sustainable. 1 also find that it is required to file application for refund claim to the competent authority within time limit as prescribed under Section 27 of Customs Act'1962. In the case of Madras Rubber Factory Ltd versus Union of India & Ors [1983(13)E.L.T.1579 (S.C.)]. the Apex Court has held that "Refund is not admissible if application for refund of excess duty paid not filed within prescribed time limit-Effect of maintaining a running account of lodging a protest-Section 27 of the Customs Act '1962". Further. In the case of Collector of C.E. Chandigarh Versus Doaba Co-operative Sugar Mill [1988(37) E.L.T 478 (S.C.)], the Apex Court also held that "Refund of duty recovered without the authority of law- Limitation under the general law applicable-But for refund claims made before the departmental authorities- Limitation provided under Customs Appeal No.70059 of 2020 5 Customs Act/Central Excise Act or the Rule made there under applicable-Authorities functioning under an act bound by the provisions". I find that the ratio of the above judgments are squarely applicable in this case, hence I also place reliance on the same holding that the period of limitation as prescribed under Section 27 of the Customs Act'1962 in the case of refund application of the appellant is applicable.
9. I observe that the appellant filed their Refund claim on 01.05.2018 after final assessment of Bill (s) of entry in the month of November 2016 and January 2017. In the instant case, the claim was filed by the appellant on 01.05.2018 after lapse of one year of reassessment of Bills of entry, though under Section 27 of the Customs Act, 1962, the refund claim was required to be filed within one year. For better clarification, I reproduce the relevant para of Section 27 of Customs Act'1962".
(IB)(b) where the duty becomes refundable as a consequence of any judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any Court, the limitation of one year shall be computed from the date of such judgment, decree, order or direction:
1(B)(c) Where any duty is paid provisionally under Section 18, the limitation of one year shall be computed from the date of adjustment of duty after the final assessment thereof in the case of re-assessment, from the date of re-
assessment.
From the above, it is clear that the appellant was required to file their refund claim within one year form the reassessment of the Bills of entry as mandated under Section 1(B) (c) of Section 27 of Customs Act' 1962 which they failed to do so.
10. I also place reliance in the decision of CESTAT in the case of GMMCO Ltd Versus Commissioner of Customs, Customs Appeal No.70059 of 2020 6 Chennai [2004(177) E.L.T.848 (Tri.- Chennai), wherein, Hon'ble Tribunal has held that:
Refund Limitation - Provisional assessment Even where any duty is paid as provisionally assessed under Section 18 of Customs Act. 1962. period of limitation under sub-section (1) of Section 27 ibid is applicable to a claim for refund of duty consequential to finalisation of provisional assessment - Provisions of Section 27 ibid cannot be given a go-by in context of claiming refund of duty consequential to finalisation of provisional assessment - Explanation II to Section 27(1) ibid recognised pre-existing applicability of Section 27 ibid to such refund claim. [para 9] Refund - Provisional assessment Refund arising from finalisation of provisional assessments under Section 18 of Customs Act, 1962 would have to be claimed under Section 27 ibid because until provisional assessments are finalised, the assessee has no cause of action for refund. [para 11] Refund - Extra duty paid by appellants on 8.3% loaded value of goods imported Such payments are not only security deposits under Section 129E of Customs Act, 1962-Specific claims to be filed under Section 27 ibid for refund of such amount of duty. [para 9]
11. In view of above para, I find that the refund claim filed by the appellant is hit by limitation under sub Section 1(B)
(c) of Section 27 of the Customs Act' 1962 and I have no reason to intervene in the impugned order passed by the adjudicating authority. Further, the Apex Court, in the case of Union of India Versus Kirloskar Pneumatic Company [1996(84) E.L.T.401(S.C.)] has held that "Refund-
Limitation-High Court under writ jurisdiction cannot direct the Customs authorities to ignore the time limit prescribed under Section 27 of the Customs Act even though High Customs Appeal No.70059 of 2020 7 Court itself may not be bound by the time limit of the said section-Articles 226 and 227 of the Constitution of India"
4.3 However we find that impugned order has been passed without taking the note of fact that the amount claimed as refund was not the amount of duty or interest deposited by the appellant. The said amount was deposited as security deposit as directed by the department for assessing the goods provisionally when the matter was under consideration of Special Valuation Branch (SVB). Finally SVB accepted the Value as declared by the appellant and hence the security deposit became refundable to the appellant.
4.4 As the amount was deposited as cash security, subsequent to finalization of assessment the refund of cash security should have been done automatically by the revenue. 4.5 The assessment are made provisional under the Custom Act, 1962 in terms of Section 18 which is reproduced below:
Section 18. Provisional assessment of duty. - (1) Notwithstanding anything contained in this Act but without prejudice to the provisions of section 46,-
a. where the importer or exporter is unable to make self-assessment under sub-section (1) of section 17 and makes a request in writing to the proper officer for assessment; or b. where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test; or c. where the importer or exporter has produced all the necessary documents and furnished full information but the proper officer deems it necessary to make further enquiry; or d. where necessary documents have not been produced or information has not been furnished and the proper officer deems it necessary to make further enquiry, the proper officer may direct that the duty leviable on such goods be assessed provisionally if the importer or the exporter, as the case may be, Customs Appeal No.70059 of 2020 8 furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed as the case may be, and the duty provisionally assessed.
(2) When the duty leviable on such goods is assessed finally or reassessed by the proper officer in accordance with the provisions of this Act, then -
a. in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed or re-assessed, as the case may be, and if the amount so paid falls short of, or is in excess of the duty finally assessed or re-assessed, as the case may be, the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be; b. in the case of warehoused goods, the proper officer may, where the duty finally assessed or re-assessed, as the case may be, is in excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty.
(3) The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order or re- assessment order under sub-section (2), at the rate fixed by the Central Government under section from the first day of the month in which the duty is provisionally assessed till the date of payment thereof. (4) Subject the sub-section (5), if any refundable amount referred to in clause (a) of sub-section (2) is not refunded under that sub-section within three months from the date of assessment, of duty finally or re- assessment of duty, as the case may be, there shall be paid an interest on such un-refunded amount at such Customs Appeal No.70059 of 2020 9 rate fixed by the Central Government under section 27A till the date of refund of such amount.
(5) The amount of duty refundable under sub-section (2) and the interest under sub-section (4), if any, shall, instead of being credited to the Fund, be paid to the importer or the exporter, as the case may be, if such amount is relatable to:
a. the duty and interest, if any, paid on such duty paid by the importer, or the exporter, as the case may be, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
b. the duty and interest, if any, paid on such duty on imports made by an individual for his personal use; c. the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
d. the export duty as specified in section 26; e. drawback of duty payable under sections 74 and 75.] 4.6 The cash security made by the appellant was in lieu of any duty that would have become due on account of finalization of assessment in terms of the rule 18 (2). The rule clearly provides that in case if on finalization of assessment the duty determined falls short of the duty paid and the amount deposited, the appellant will be entitled to refund of the amount which is paid by him in excess of the amount of duty finally assessed. Section 18 (4) clearly provides that the amount refundable in terms of Section 18 (2) should be refunded to the appellant within three months of finalization of assessment. The Section 18 (5) is independent provision and not sub servant to Section 27 of the Customs Act, 1962. For the amounts to be refunded in terms of Section 18 (2) read with Section 18 (5) no separate claim for the refund is required to be made and the refund becomes automatically due and is to be granted within three months of finalization of assessment.
Customs Appeal No.70059 of 2020 10 4.7 Hon'ble Supreme Court has in acse of Mafatlal Industries [1997 (89) ELT 247 (SC)] has observed as follows:
"95. Rule 9B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub- rule (1). The goods provisionally assessed under sub- rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that "when the duty leviable on the goods is asssessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be". Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) re-agitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation."
4.8 In view of the above decision we do not find any merits in the impugned order, as it has applied the limitation provided under Section 27 of the Customs Act, 1962 for rejecting the refund of cash security made by the appellant for provisional Customs Appeal No.70059 of 2020 11 assessment and which became refundable subsequent to finalization of assessment. The refund should have been made as per the provisions of Section 18 (4) of the Customs Act, 1962. 5.1 Appeal is allowed with consequent relief.
(Pronounced in open court on- 07 June, 2024) (P.K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp