Commissioner of Customs Vs GMMCO Ltd. (Madras High Court)
The Madras High Court considered an appeal filed by the Revenue challenging the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had upheld the refund of Extra Duty Deposit (EDD) collected from M/s GMMCO Ltd. in respect of imports of engines and engine parts from M/s Caterpillar Far East Ltd.
The Tribunal had recorded that the imports were initially assessed with loading of EDD pending final determination of whether the declared value was depressed because of the relationship between the supplier and the importer. By Final Order Nos. 667 and 668/2000 dated 25.08.2000, the Tribunal had held that the declared value was acceptable for assessment. The Department’s appeal against that order had subsequently been dismissed by the Supreme Court. Despite this, EDD continued to be collected for imports made between 25.08.2000 and July 2001.
Following the Supreme Court’s order, the importer sought refund of the EDD collected during the said period. The refund was not granted on the ground that no proper claim had been filed in the prescribed manner. The Commissioner (Appeals), however, held that once the declared value had been accepted by the CESTAT, the EDD collected thereafter had to be refunded with interest. The Commissioner (Appeals) further held that the amount had been collected without legal sanction and that its refund was not governed by Section 27 of the Customs Act.
Before the Tribunal, the Revenue contended that refunds could be granted only upon claims made under Section 27 of the Customs Act and that no such prescribed claim had been filed. It also argued that the Commissioner (Appeals) had directed payment of interest beyond her competence and jurisdiction.
The respondent submitted that, pursuant to the Supreme Court’s judgment, the Special Valuation Branch Circular dated 18.07.2001 advised finalisation of GMMCO’s assessments and that the excess amounts collected illegally ought to have been returned suo motu.
The Tribunal held that the respondents were entitled to refund of the excess amounts forcibly collected. It observed that the respondents had claimed refund, though the claim had been rejected. It further observed that the Customs Act provides for payment of interest where refund is sanctioned after delay beyond three months from filing of the claim under Section 27A. Accordingly, the Tribunal dismissed the Revenue’s appeal and sustained the order directing refund with interest under Section 27A.
The Revenue challenged the Tribunal’s order before the High Court. At the time of admission, the Court framed the following substantial questions of law:
1. Whether any duty paid by the assessee pursuant to an assessment order can be refunded by treating it as a deposit while ignoring Section 27 of the Customs Act, 1962.
2. Whether the amount paid by the assessee constituted duty paid pursuant to assessment or a deposit.
3. Whether the assessee was required to satisfy the requirement of unjust enrichment while seeking refund.
The High Court observed that the Tribunal had found the EDD to have been collected without legal sanction and that such amount was liable to be returned both on common law principles and under the statutory provisions. However, upon examining the Tribunal’s reasoning, the High Court held that the direction to refund the amount deposited as Extra Duty Deposit squarely fell within Section 27 of the Customs Act, 1962.
Accordingly, the High Court dismissed the Civil Miscellaneous Appeal filed by the Revenue and answered the substantial questions of law in accordance with its findings. No order as to costs was passed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Appeal is filed by the Revenue, being aggrieved by the Order passed by the Customs, Excise and Service Tax Appellate Tribunal in Final Order No.1511 of 2007 dated 20.12.2007.
2. The short Order, which is challenged in this Case, reads as below:-
“Imports of engines and its parts by M/s GMMCO Ltd., Chennai from M/s Caterpillar Far East Ltd., were assessed with a loading of Extra Duty Deposit (EDD) pending final determination if the value of such imports was depressed due to any relationship between the supplier and GMMCO. Vide Final Order No.667 and 668/2000 dated 25.08.2000 of the Tribunal, the value declared by GMMCO was found to be acceptable for assessment. Department’s appeal to the Apex Court against the Final Orders dated 25.08.2000(supra) was dismissed. EDD was however collected for the imports between 25.08.2000 and July 2001. Pursuant to the order of the Apex Court, GMMCO approached the department for refund of the EDD made during the above period. The same was not allowed as there was no proper claim as prescribed. In the impugned order, the Commissioner (Appeals) decided that once the CESTAT had decided that the declared value was not depressed and had to be accepted EDD collected for imports from 25.08.2000 had to be refunded with interest. She found that the amount had been collected without legal sanction and that its refund was not governed by Section 27 of the Customs Act (the Act).
2.The instant appeal filed by the revenue seeks to vacate the impugned order. It is submitted that refunds could be granted only against claims made under Section 27 of the Act and that the respondents had not made any claim in terms of Section 27 as prescribed. Unless a claim was filed, admissibility of the same to the importer could not be examined. Moreover, the Commissioner(Appeals) had ordered grant of interest in excess of her competence and jurisdiction. The ld SDR reiterates the grounds of appeal. The ld Counsel for the respondents invites our attention to as SVB Circular dated 18.07.2001, advising the concerned to finalise assessment of imports of GMMCO in the light of the Apex Court’s judgment. He submits that the extra amounts illegally collected had to be returned suo motu and that the impugned order deserves tobe sustained.
3.We have carefully studied the case records and considered the submissions. As rightly found by the Commissioner (Appeals), the respondents are eligible for refund of the excess amounts forcibly collected from them. The respondents had claimed refund of the excess amount which was rejected. The Act provides for grant of interest where there has been delay in sanctioning refund beyond three months of filing the claim in terms of Section 27A of the Act. The revenue’s challenge to the impugned order is devoid of merits as regards the excess amount collected and interest in terms of Section 27A of the Act. Accordingly, we dismiss the appeal filed by the revenue and sustain the impugned order.”
3. At the time of admission, the following Substantial Questions of Law were framed for consideration:-
(1) Whether any duty paid by the assessee in pursuance of an order of assessment can be refunded ignoring the statutory provisions of Section 27 of the Customs Act, 1962, by treating it as a deposit?
(2) Whether the duty paid by the assessee is a duty paid by him in pursuance of an order of assessment or a deposit?
(3) Whether the first respondent assessee is liable to satisfy the question of unjust enrichment while making a refund claim?
4. The reading of the impugned order clearly indicates that the Extra Duty Deposit (EDD) paid by the Assessee, which is found to have been collected without legal sanction, is bound to be returned both on the basis of common law principles as well as the statutory provisions. However, the appeal is filed by the Revenue on the ground that the duty paid by the importer cannot be refunded, since it is not deposited.
5.This Court, on considering the reasoning given by the Customs, Excise and Service Tax Appellate Tribunal, finds that the direction to the Department to refund the amount, which was deposited as Extra Duty Deposit (EDD) squarely falls under Section 27 of the Customs Act, 1962. Therefore, this Civil Miscellaneous Appeal is to be dismissed and substantial Questions of Laws are answered accordingly.
6. In the result, this Civil Miscellaneous Appeal is dismissed. No order as to costs.
