Custom, Excise & Service Tax Tribunal
Tuticorin vs Tamil Nadu Generation And Distribution ... on 28 June, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 41713 of 2013
(Arising out of Order-in-Appeal No. 28/2013 dated 30.04.2013 passed by the
Commissioner of Customs & Central Excise (Appeals), No. 1, Williams Road,
Cantonment, Tiruchirappalli - 620 001)
The Commissioner of Customs : Appellant
Custom House, New Harbour Estate,
Tuticorin - 628 004
VERSUS
M/s. Tamil Nadu Generation & Distribution : Respondent
Corporation Limited
2nd Floor, NPKRR Maaligai,
No. 144, Anna Salai,
Chennai - 600 002
APPEARANCE:
Shri S. Balakumar, Assistant Commissioner for the Appellant
Shri R.R. Padmanabhan, Consultant for the Respondent
CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER NO. 40498 / 2023
DATE OF HEARING: 26.05.2023
DATE OF DECISION: 28.06.2023
Order : [Per Hon'ble Mr. P. Dinesha]
Brief undisputed facts that emerge from perusal of
the orders of lower authorities are that the assessee filed
seven refund claims for refund of Customs Duty paid in
respect of import of 'non-coking coal in bulk' imported
under seven Bills-of-Entry. According to the assessee, the
refund of Customs Duty paid for the above import arose
since the assessable value was worked out by adding 2%
of CIF value on high seal sales load at the time of
assessment of import of goods, which the assessee wanted
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to be re-assessed by adding Rs.33/- per M.T., apparently
paid to the supplier viz. M/s. MMTC Ltd. as trade margin,
to the assessable value.
2. It appears from the record that seven Show Cause
Notices came to be issued, but which are not placed on
record or along with the appeal memorandum, proposing
inter alia to reject the refund claims of Rs.45,45,970/-. It
also appears that the respondent herein filed a common
reply justifying its claim for refund, which was thereafter
considered in adjudication.
3. It appears that the adjudicating authority,
entertaining a belief that the claims of the assessee were
not in order and that the assessee did not produce any
documentary evidence to prove that their claim was not hit
by unjust enrichment as enshrined under proviso to
Section 27(2) of the Customs Act, 1962, after considering
the reply filed by the assessee, vide Order-in-Original
dated 31.12.2012, rejected all the assessee's claims, as
proposed in the Show Cause Notices.
4.1 It appears that the assessee preferred an appeal
before the first appellate authority against the rejection of
its refund claims and the first appellate authority, vide
impugned Order-in-Appeal No. 28/2013 dated 30.04.2013
has allowed the appeal of the assessee-appellant before
him, thereby setting aside the rejection order of the
adjudicating authority.
4.2 The learned first appellate authority has, in the
impugned Order-in-Appeal, observed that: -
• The appellant had produced relevant purchase
order / invoice showing payment of high sea sales
commission charges at Rs.33/- per M.T.
• The above was not considered by the adjudicating
authority.
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• Reference is made to Board Circular No. 32/2004-
Cus. dated 11.05.2004 which inter alia clarified that
the adjudicating authority has no choice but to
adopt the high sea sales commission / trade
margin.
• Reference was also made to the Instructions in
C.B.E.C. Manual on refunds, which was not
considered by the adjudicating authority.
• The adjudicating authority has also not given any
finding nor has he considered the provisions of Rule
10(3) and Rule 10(4) of the Customs Valuation
Rules, 2007.
4.3 With the above observations, the learned first
appellate authority has given a finding that the assessee
was eligible for refund based on the duty paid on the
assessable value plus Rs.33/- per M.T. by them as trade
margin, but however, with respect to unjust enrichment,
he has directed the assessee to produce all relevant
documents before the lower authority to prove that the
incidence of duty was not passed on to the buyers.
5. Aggrieved by the above, the Revenue has filed the
present appeal on the following grounds: -
(i) The finding of the first appellate authority on Rule
10(3) and Rule 10(4) ibid., is not applicable for an
order under Section 17 of the Customs Act, 1962.
(ii) The importer should have filed appeal against the
said order passed under Section 17 of the Customs
Act.
(iii) The importer should have brought to the
notice of the adjudicating authority the provision of
Rule 10(3) and Rule 10(4) ibid., the Board Circular
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Appeal No.: C/41713/2013-DB
No. 32/2004-Cus. dated 11.05.2004 and also other
case-law.
(iv) The addition of 2% to the assessable value is
not in terms with the Board Circular No. 32/2004
and it is a voluntary act of the importer who added
2% notional value.
(v) There is no evidence placed on record by the
importer as to any amendment in any of the Bills-
of-Entry.
(vi) The importer did not pay the duty under
protest nor were the impugned Bills-of-Entry
assessed provisionally and since there was no
contest from the importer in the particular
assessment, the same is not an adverse order and
consequently, the refund claims are contrary to an
order which had attained finality.
(vii) Reference is drawn to Board Circular No.
24/2004-Cus. dated 18.03.2004 wherein the Board
has clarified that when there was no challenge to the
assessment order, any refund claim was not
maintainable.
(viii) Reliance is placed on the following decisions:-
a. ITC Ltd. v. Commissioner of Central Excise,
Kolkata-IV [2019 (368) E.L.T. 216 (S.C.)]
b. Commissioner of Central Excise v. Flock (India)
Pvt. Ltd. [2000 (6) SC 650]
c. Priya Blue Industries v. Commissioner of Customs
(Preventive) [2004 (172) E.L.T. 145 (S.C.)]
d. Commissioner of Central Excise, Meerut v.
B.H.E.L. [2004 (163) E.L.T. 100 (Tri. - Del.)]
e. Industrial House v. Commissioner of Customs,
New Delhi [2008 (227) E.L.T. 539 (Tri. - Del.)]
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6. Shri S. Balakumar, learned Assistant Commissioner
appearing for the appellant, reiterated the above grounds
preferred by the Revenue.
7. Per contra, Shri R.R. Padmanabhan, learned
Consultant, appeared for the assessee-respondent and
supported the findings of the learned first appellate
authority.
8. We have considered the rival contentions and we
have perused the orders of the lower authorities.
9. After hearing both sides, we find that the only issue
that arises for our consideration is: whether the order of
the first appellate authority in holding that the
assessee/appellant therein was eligible for refund, is
correct in law?
10.1 The first appellate authority has held that the
appellant had produced relevant purchase order and
invoice, showing high sea sales commission charges of
Rs.33/- per M.T. which was not considered by the
adjudicating authority. In the adjudication order, however,
the following observations were made by the authority,
after verifying documents submitted by the importer: -
a) Import cargo was assessed to import duty based on
the price as per the formula set forth in the purchase
order dated 24.02.2011 and purchase order dated
25.09.2010.
b) In the purchase order, it has been enumerated as to
how the weighment quantity for assessment
purpose to be followed, i.e., by adding bonus point
for gross calorific value / ash content, etc., at clause
8.1.
c) The weighment quantity declared as per the draft
survey report (ADB) and C&F price payable, as per
clause 2.1, based on the certificate of sampling
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Appeal No.: C/41713/2013-DB
analysis report, were considered for assessment
purposes.
d) The cargo was self-assessed by adding 2% HSS
commission to the CIF price which was approved as
per Board's Circular No. 32/2004-Cus. dated
11.05.2004.
e) The duty as per the self-assessment in respect of the
Bills-of-Entry involved was accepted by M/s. TNEB
and the same was also paid. The same has become
final.
10.2 The trade margin of Rs.33/- per M.T. paid by the
appellant to M/s. MMTC is claimed to be in terms of
agreement at clause 2.1 of the purchase orders dated
24.02.2011 and 25.09.2010. In terms of the purchase
orders, the adjudicating authority had observed that the
value depended on two factors, namely, quantity and price
adjusted as per load port test results, and that the
documents furnished by them were sufficient to prove the
transaction value; that the levy of 2% on assessable value
was not as per the Board's Circular (supra); the amount
of excess duty paid on account of inclusion of 2% on CIF
as HSS charges in the assessable value instead of Rs.33/-
per MT, was to be refunded.
10.3 The adjudicating authority observes that the
importer did not file any documents in support of their
claim that the burden / incidence of duty was not passed
on to the ultimate consumers within the meaning of Section
27(2) of the Customs Act, 1962. It is the claim of the
importer that the assessable value of the cargo was arrived
at by adding 2% HSS load to the CIF price at the time of
self-assessment instead of adding the trade margin of
Rs.33/- per M.T. to the CIF value.
10.4 With regard to the quantity of import cargo, it was
found by the adjudicating authority that there was
variation between that declared in the Bills-of-Lading
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Appeal No.: C/41713/2013-DB
vis-à-vis Bills-of-Entry and thus the importer failed in the
first test.
10.5 Further, he has observed that the cargo was
assessed to import duty based on the price as per the
formula set forth in the purchase orders and in the
purchase orders, it was mentioned as to how the
weighment quantity for assessment purpose was to be
followed.
11.1 There is no dispute that the HSS agreement entered
into was based on the purchase orders, the weighment
quantity declared as per their own draft survey report
(ADB) and the C&F price payable, as per clause 2.1, based
on the certificate of sampling analysis report, were
considered for assessment purposes. It is only thereafter
that the self-assessed Customs Duty by adding 2% HSS
commission was accepted. With regard to the trade margin
of Rs.33 per M.T., the importer had not demonstrated as
to how the margin of profit of Rs.33/- per M.T. was arrived
at, anywhere in the documents furnished by it.
11.2 The importer's claim as to the Bill-of-Lading quantity
to be adopted for assessment is contradictory to the
conditions set forth in the purchase order, which is
mutually agreed upon between the parties, specifically at
clause 3.5 of the purchase order as pointed out by the
adjudicating authority and this fact has not been
controverted by the assessee. If the claim of the importer
is to be accepted then the survey report based on ADB
quantity is farce, which is again declared by the importer
himself. Moreover, the Board Circular mandates that high
sea sale contract price paid by the last buyer is required to
be established with supporting documents whereas no such
documentary evidences were submitted to prove the trade
margin of Rs.33/- per M.T. and therefore, the claim of the
importer is clearly contrary to the instruction of the Board
Circular.
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Appeal No.: C/41713/2013-DB
11.3 Assessable value adopted by the claimant-importer
by including 2% HSS load and duty calculated by them was
accepted by the proper officer and the duty so arrived at
was also paid by M/s. TNEB without any protest, but
however, the fact that remains to be ascertained is whether
the incidence of duty has been passed on to the ultimate
consumer.
11.4 Value addition, if any, as prescribed under Rule 10
of the Customs Valuation (Determination of Value of
Imported Goods) Rules, 2007, could always be a point of
dispute since a claim for such addition by an importer
needs to be supported by documentary evidence, to the
satisfaction of the adjudicating authority. Further, as we
have analysed in the above paragraphs, the satisfaction of
the assessing officer / adjudicating authority is paramount
since he is the proper officer under the statute who is to be
satisfied in the first place as to such claims by an importer.
Hence, we are of the clear view that these aspects could
only be considered during adjudication proceedings and
not in any other proceedings.
12. Further, we find that the importer is claiming refund,
thereby indirectly challenging the assessment order, which
is contrary to the law laid down by the Hon'ble Supreme
Court in the case of Flock (India) Pvt. Ltd. (supra) and Priya
Blue Industries (supra).
13.1 It is the settled position of law that the right to
appeal is available to an assessee as well as the
Department, even against self-assessment; until and
unless the "self-assessment" is modified and the duty
thereafter is re-determined, no application would lie for
refund of any duty from such self-assessment since the
refund authority cannot assume the role of an adjudicating
/ assessing authority. This is because the scope of refund
is limited as against the scope of adjudication proceedings
and hence, the authority considering any refund
application cannot revisit the adjudication proceedings for
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Appeal No.: C/41713/2013-DB
which he has no jurisdiction. This is also in view of separate
statutory provisions being provided for, for both refund as
well as adjudication proceedings.
13.2 The Hon'ble Supreme Court in the case of M/s. ITC
Ltd. (supra) has held that even an order of self-assessment
is an order against which an appeal would lie, provisions of
Section 27 cannot be invoked in the absence of
amendment or modification having been made in the
bill-of-entry and that refund proceedings are in the nature
of execution for refunding amount. In this regard, the
following paragraphs are relevant: -
"43. As the order of self-assessment is nonetheless an
assessment order passed under the Act, obviously it
would be appealable by any person aggrieved thereby.
The expression 'Any person' is of wider amplitude. The
revenue, as well as assessee, can also prefer an appeal
aggrieved by an order of assessment. It is not only the
order of re-assessment which is appealable but the
provisions of Section 128 make appealable any decision
or order under the Act including that of self-assessment.
The order of self-assessment is an order of assessment
as per Section 2(2), as such, it is appealable in case any
person is aggrieved by it. There is a specific provision
made in Section 17 to pass a reasoned/speaking order in
the situation in case on verification, self-assessment is
not found to be satisfactory, an order of re-assessment
has to be passed under Section 17(4). Section 128 has
not provided for an appeal against a speaking order but
against "any order" which is of wide amplitude. The
reasoning employed by the High Court is that since there
is no lis, no speaking order is passed, as such an appeal
would not lie, is not sustainable in law, is contrary to what
has been held by this Court in Escorts (supra).
44. The provisions under Section 27 cannot be invoked
in the absence of amendment or modification having been
made in the bill of entry on the basis of which self-
assessment has been made. In other words, the order of
self-assessment is required to be followed unless modified
before the claim for refund is entertained under Section
27. The refund proceedings are in the nature of execution
for refunding amount. It is not assessment or re-
assessment proceedings at all. Apart from that, there are
other conditions which are to be satisfied for claiming
exemption, as provided in the exemption notification.
Existence of those exigencies is also to be proved which
cannot be adjudicated within the scope of provisions as to
refund. While processing a refund application, re-
assessment is not permitted nor conditions of exemption
can be adjudicated. Re-assessment is permitted only
under Section 17(3)(4) and (5) of the amended
provisions. Similar was the position prior to the
amendment. It will virtually amount to an order of
assessment or re-assessment in case the Assistant
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Appeal No.: C/41713/2013-DB
Commissioner or Deputy Commissioner of Customs while
dealing with refund application is permitted to adjudicate
upon the entire issue which cannot be done in the ken of
the refund provisions under Section 27. In Hero Cycles
Ltd. v. Union of India - 2009 (240) E.L.T. 490 (Bom.)
though the High Court interfered to direct the
entertainment of refund application of the duty paid under
the mistake of law. However, it was observed that
amendment to the original order of assessment is
necessary as the relief for a refund of claim is not
available as held by this Court in Priya Blue Industries Ltd.
(supra).
.
.
47. When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act."
13.3 In the case on hand, we find that the refund application is clearly not maintainable by applying the ratio decidendi in M/s. ITC Ltd. (supra).
14. In view of the above, we find that the direction of the first appellate authority to issue refund is clearly unsustainable and hence, we set aside the same.
15. Resultantly, the appeal of the Revenue stands allowed and the order of the original authority is restored.
(Order pronounced in the open court on 28.06.2023) Sd/- Sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Sdd