Custom, Excise & Service Tax Tribunal
Tecumseh Products India Ltd vs Commissioner Of Customs (Import), ... on 7 May, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/751/04 (Arising out of Order-in-Appeal No. 271/2004 MCH dated 21.6.2004 passed by Commissioner of Customs (Appeals), Mumbai-I) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) Hon'ble Mr. S.K. Gaule, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Tecumseh Products India Ltd. Appellant Vs. Commissioner of Customs (Import), Mumbai Respondent Appearance: Shri T. Viswanathan, Advocate, for appellant Shri P.K. Agarwal, Authorised Representative (JCDR), for respondent CORAM: Hon'ble Mr. P.G. Chacko, Member (Judicial) Hon'ble Mr. S.K. Gaule, Member (Technical) Dates of Hearing: 6th & 7th May, 2010 Date of Decision: 7th May, 2010 ORDER NO................................. Per: P.G. Chacko, M(J)
This appeal is by the assessee who had imported goods declared as "second-hand refurbished motor winding line with standard parts and accessories" in a bill of entry filed on 13.8.1998 under claim of the benefit of Customs Notification 23/98 (Sr.No.138). The goods were assessed provisionally to duty and released to the importer on 9.11.1998 against production of bank guarantee for the differential duty amount of Rs.1,63,16,799/- including CVD. The benefit of the above Notification was allowed subject to fulfilment of the relevant conditions. As per serial No.138 of the Table annexed to the Notification, goods falling under any chapter of the Customs Tariff Schedule, which were required for setting up of new capacity with non-ODS (Ozone Depleting Substances) technology were chargeable to 'nil' rate of duty. The Explanation to this entry clarified that such goods should be designed exclusively for non-ODS technology. There were two conditions attached to this benefit of 'nil' rate of duty. Firstly, the project for setting up of new capacity with non-ODS technology should have been approved by the Steering Committee set up in the Ministry of Environment and Forests (MOEF) for the clearance of the project and, secondly, the importer should furnish a list of the goods required for the project accompanied by a certificate from an officer not below the rank of a Deputy Secretary in MOEF to the effect that the goods mentioned in the said list were required for the said project. The first of these conditions was fulfilled by the importer, but the second condition could not be met by them. As a matter of fact, it was only after obtaining provisional release of the goods that the appellant applied to the Ministry for the requisite certificate. The assessee pursued the matter with MOEF and obtained a certificate on 29.1.1999 to the effect that the goods described in annexure 'A' thereto were required for the project and designed exclusively for non-ODS technology as explained in the Notification. The goods were described as follows in annexure 'A' to the certificate.
Equipment Description Qty Purchase Order No. & Date Name and Address of Exporter Motor Winding Line for Midget Motor
a) Winder for main Phase line-main phase
b) Inserting M/c.
c) First blocker
d) Winder for auxipillar phase
e) Shrinking oven
f) Second blocker
g) Semi final blocker
h) lacing machine
i) Final blocker
j) Stator ID bearingizer 6 IMP/CD/123 dated 14.2.98 M/s. Tecumseh Do Brasil Ltda, rua Cel.Jose Augusto de Oliveira Sailes, 178 Caixa Postal 54 CEP 13570-900 Sao Carlos SP Brasil The above certificate, which did not describe the goods as "second-hand refurbished motor winding line for midget motor" as declared in the bill of entry, was not acceptable to the assessing authority. The assessee, thereupon, approached MOEF for a fresh certificate, requesting the authority to specify the goods as "second-hand refurbished motor winding line covering all equipments mentioned in purchase order dated 14.2.1998". The new certificate dated 2.9.1999 issued by MOEF, however, described the goods in the same manner as in the first certificate dated 29.1.1999. This certificate was also produced before the assessing authority. In the meanwhile, the assessee was pressing for finalisation of the provisional assessment as they did not want to renew the bank guarantee for any further period. This request as contained in their letter dated 27.5.1999 was acceded to and accordingly the assessment was finalised on 12.7.1999, following which the assessee paid duty of over Rs.1.63 crores on 19.7.1999. Subsequently, a refund claim was filed on 16.1.2000 for an amount of Rs.1,15,19,138/-. The party had already availed MODVAT credit of the CVD paid on the goods and hence that amount of duty was not included in the refund claim. In support of this refund claim, the assessee claimed that they had complied with the conditions of the Notification and hence entitled to refund of the above amount of duty paid by them. In a show-cause notice subsequently issued to them, the department proposed to reject the refund claim on the following grounds:-
i) The application for Essentiality Certificate was made after clearance and it has been laid down by several decision of Tribunal that the benefit is not available in such cases;
ii) The original Essentiality Certificate dated 29.1.1999, issued does not cover Second hand/refurbished goods;
iii) The additional certificate dated 2.9.1999 does not cover the subject goods.
The proposal to reject the refund claim on the above grounds was contested by the party. In adjudication of the dispute, the Deputy Commissioner of Customs held to the effect that the certificate from MOEF produced by the party did not satisfy condition No.23 attached to the Notification inasmuch as "second-hand/refurbished motor winding line" imported by them was not covered by that certificate. The refund claim thus came to be rejected on merits. The adjudicating authority observed that there was no need to look into the question of unjust enrichment. The order-in-original was upheld by the Commissioner (Appeals) in an appeal filed by the assessee. The appellate authority noted inter alia that the assessment had been finalised on merit on 19.7.1999 and that there was no change of circumstances which should have prompted the appellant to file a refund claim. The present appeal of the assessee is directed against the decision of the lower appellate authority.
2. The learned counsel for the appellant has exhaustively argued on merits. His points can be summarized as follows:-
(a) In the purchase order placed by the appellant with the overseas supplier, the goods were specified as second-hand/refurbished motor line. A copy of this document was also placed before the competent authority in MOEF at the time of applying for the Essentiality Certificate. It was after taking note of the above description of the goods that the said authority issued such certificate. Therefore, the certificate should be deemed to have been issued in relation to second-hand/refurbished motor line.
(b) In their letter dated 27.5.1999 submitted to the Assistant Commissioner of Customs, the appellant had, apart from requesting for speedy finalisation of the provisional assessment, reserved their right to file refund claim after obtaining necessary clarification from MOEF. In view of this stand taken by the appellant before the assessing authority, it should be deemed that the assessment was under challenge or that the duty to be paid on the goods was going to be a payment under protest. In the circumstances, the apex court's decisions in the cases of CCE, Kanpur vs. Flock (India) Pvt. Ltd. 2000 (120) ELT 285 (SC) and Priya Blue Industries Ltd. vs. CC 2004 (172) ELT 145 (SC) would not be applicable to this case.
(c) The Hon'ble Delhi High Court, in the case of Aman Medical Products Ltd. vs. CC, Delhi 2010 (250) ELT 30 (Del.), has answered the following question of law in the negative: "Whether non-filing of appeal against the assessed Bill of Entry in which there was no lis between the importer and the Revenue at the time of payment of duty will deprive the importer of his right to file refund claim under section 27 of the Customs Act, 1962?" There was no lis between the appellant and the department in relation to the assessment of the bill of entry and, therefore, there is no bar for claiming refund of the amount of duty paid by the assessee.
(d) In the case of Jindal Vijayanagar Steel Ltd. vs. CC, Mangalore 2006 (200) ELT 263 (Tri.-Bang.), it was held that the filing of refund claim itself was a challenge against the assessment order and, therefore, refund was not deniable on the ground that assessment order was not otherwise challenged. In the said case, the cases of Flock (India) Pvt. Ltd. and Priya Blue Industries were also referred to.
(e) Neither in the show-cause notice nor in the orders of the lower authorities was there any proposal to reject the refund claim on the ground that the assessment was not challenged. It is not permissible for this Tribunal to reject the refund claim on such ground. If, on the other hand, the claim is rejected on the said ground, it would be beyond the scope of the show-cause notice, which is impermissible, as held by the Supreme Court in Saci Allied Products Ltd. vs. CCE, Meerut 2005 (183) ELT 225 (SC).
3. The learned JCDR has opposed the above arguments. He submits that the assessee paid duty on the basis of the finalised assessment and also availed MODVAT credit of the CVD part thereof. In other words, the assessee accepted the finalisation of assessment and enjoyed the fruit thereof. The order of assessment was appealable under the provisions of the Customs Act. As it was not appealed against successfully, the assessee was not entitled to claim refund. In this connection, the learned JCDR has relied on the apex court's decisions in Flock (India) Pvt. Ltd. (supra) and Priya Blue Industries (supra) and has also referred to the Tribunal's Larger Bench decision in CC, Nhava Sheva vs. Eurotex Indus. & Exports Ltd. 2007 (216) ELT 137 (Tri.-LB), wherein the Bench followed the above decisions of the apex court as well as the judgment rendered by the court in Mafatlal Industries Ltd. vs. UOI 1997 (89) ELT 217 (SC) and held that any refund of duty could not be claimed unless the assessment order was set aside in accordance with law. The learned JCDR has made an endeavour to distinguish the case of Aman Medical Products Ltd. (supra) by submitting that, in that case, there was no order of assessment, nor any lis. It has been argued that the High Court's decision cannot be applied to the instant case where there is an order of assessment which was at least partly accepted by the assessee by availing MODVAT credit of the CVD paid on the basis of such assessment. JCDR has also argued that a question of law can be raised at any stage of litigation. According to him, the Commissioner (Appeals) has noted in his order, though not in so many words, that there was no cause of action for the appellant for claiming refund of duty after finalisation of the provisional assessment. It is argued that the appellate authority was having in its mind the fact that the assessment had not been set aside or modified in any legal proceedings permitted under the Customs Act. It is argued that, in such circumstances, it cannot be contended by the appellant that the refund claim was not rejected on the ground that the assessment was not challenged.
4. We have given careful consideration to the submissions. Admittedly, the goods were declared in the bill of entry as second-hand/refurbished motor line and parts and accessories thereof, in the same way as the goods had been described in the purchase order. When the bill of entry was provisionally assessed, it was an assessment on the goods as declared by the assessee. This assessment was finalised and, on that basis, duty was paid by the assessee. This finalisation of provisional assessment was made, admittedly, at the assessee's own instance. MODVAT credit of the CVD part of the duty paid by them was availed by the assessee with promptitude. In other words, the assessee chose to take the benefit of the finalised assessment. It is settled law that a final assessment is appealable under the provisions of the Customs Act. Admittedly, no appeal was filed by the assessee. On these facts, the ruling of the apex court in Mafatlal Industries (supra) and in the later cases of Flock (India) Pvt. Ltd. and Priya Blue Industries (supra) is squarely applicable. The ruling is to the effect that, where an assessee paid duty on the basis of assessment but claims refund of the whole or any part of such duty subsequently, he would not be entitled to such refund unless the assessment has been successfully challenged in accordance with the provisions of law. Admittedly, in the instant case, there was no challenge to the finalised assessment. Therefore, the above ruling of the apex court would operate against the appellant.
5. The learned counsel has relied on the Tribunal's decision in Jindal Vijayanagar Steel (supra) wherein it was held that the refund claim itself amounted to challenge against the assessment order and, therefore, under Section 27 of the Customs Act, the refund was not deniable on the ground that the assessment order was not challenged. We find that this order of a two-Member Bench of the Tribunal was also considered by the Larger Bench in the case of Eurotex Industries & Exports (supra). The view taken by the Larger Bench was that there should be a successful challenge to the assessment order prior to claim of refund of the duty paid on the basis of the assessment. The Tribunal's Larger Bench also considered the Supreme Court's judgments in Flock (India) Pvt. Ltd. and Priya Blue cases. As rightly pointed out by the learned JCDR, the Delhi High Court's decision in Aman Medical Products case is not applicable to the instant case inasmuch as, in that case, there was neither any assessment order nor any lis between the importer and the Revenue.
6. The learned counsel has made an endeavor to show that there was a lis between the Revenue and the appellant in the present case. For this purpose, he has heavily relied on the assessee's letter 27.5.1999 ibid. It was argued that the right to file refund claim was reserved in the above letter and hence the payment of duty made subsequently should be deemed to have been made under protest. These are strained arguments, which do not improve the appellant's case. It is undisputed and indisputable in this case that the assessee chose to take the benefit of the finalised assessment by availing MODVAT credit of CVD. Having done so, the assessee is estopped from contending that the refund claim should be considered as a challenge to the assessment order in so far as other duties of customs are concerned. We think we need not examine other aspects of this case.
7. For the reasons recorded by us, the impugned order is sustained and this appeal is dismissed.
(Pronounced in Court) (S.K. Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) tvu ??
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