Burden of proving communication of Order lay with customs authorities; Limitation period starts from communication date

Doowon Electronics India Pvt. Ltd. Vs Commissioner of Customs (CESTAT Chennai)

Burden of proving communication of Order lay with customs authorities; Limitation period starts from communication date

Introduction: In a notable decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai has quashed an order that denied a customs refund claim made by Doowon Electronics India Pvt. Ltd. against the Commissioner of Customs. The Tribunal ruled in favor of the appellant, emphasizing the failure of the customs authorities to serve the Order-in-Original properly and adhere to the principles of natural justice. This decision has significant implications for importers dealing with provisional assessments and refund claims.

Case Background

Doowon Electronics India Pvt. Ltd., the appellant, imported goods from a related supplier and filed 52 bills of entry for clearance, which were assessed provisionally with an additional duty deposit (EDD) of 1%. These provisional assessments were finalized by the customs authorities on April 20, 2015, as per Order-in-Original No. 36994/2015. However, the appellant claimed that they were not informed of this finalization and subsequently requested the finalization and refund of the EDD on December 20, 2018.

Despite this, on March 10, 2021, the customs authorities rejected the refund claim, stating that the request was barred by the limitation period prescribed under Section 27(1) of the Customs Act, 1962. The appellant contended that the finalization was only communicated to them on January 27, 2020, making their refund application dated August 4, 2020, timely.

Issues Raised

The central issue for consideration by CESTAT was whether the appellant’s refund claim was indeed barred by limitation as determined by the lower authorities. The Tribunal examined whether the customs authorities had properly communicated the finalization of the bills of entry to the appellant.

Tribunal’s Findings

1. Lack of Communication Evidence: The Tribunal noted that the Order-in-Original and subsequent communications did not mention the specific date of finalization of the bills of entry. This omission was critical as it directly affected the appellant’s ability to file a timely refund claim.

2. Principles of Natural Justice: The Tribunal found that the customs authorities did not adhere to the principles of natural justice. There was no evidence that the appellant was given an opportunity to be heard before the finalization order was passed. Moreover, the authorities failed to provide documented proof of the dispatch and communication dates of the Order-in-Original.

3. Burden of Proof: The Tribunal emphasized that the burden of proving the communication of the Order-in-Original lay with the customs authorities. Since they failed to discharge this burden, the appellant’s contention that they were unaware of the finalization until January 2020 was accepted.

4. Limitation Period: Given the lack of proper communication, the Tribunal ruled that the limitation period for the refund claim should be considered from the date the appellant was actually informed, i.e., January 27, 2020. Hence, the refund application filed on August 4, 2020, was within the permissible period.

Order and Conclusion

CESTAT Chennai set aside the order of the lower authorities that rejected the refund claim. The Tribunal allowed the appeal, granting Doowon Electronics the consequential benefits, if any, as per law. This decision underscores the importance of proper communication and adherence to procedural fairness by customs authorities.

FULL TEXT OF THE CESTAT CHENNAI ORDER

Brief relevant facts, as could be gathered from the record/orders of lower authorities, are that the appellant imported goods from its related supplier and for clearance, filed 52 bills of entry, which were assessed provisionally requiring payment of 1% of EDD. It appears that the said bills of entry came to be finalised vide Order-In-Original No. 36994/2015 dated 20.4.2015. Thereafter, the claimant requested for refund of the EDD vide its application dated 04.08.2020.

2. It appears that the appellant was unaware of the finalisation of its bills of entry for which, the appellant requested for finalisation of their provisional bills of entry and cancellation of pre-deposit vide their letter dated 20.12.2018, enclosing relevant documents in this regard. However, vide Order-In-Original dated 10.03.2021, the original authority passed an order rejecting the refund claim of the appellant by observing that from the evidences available on record, the finalisation of the subject bills of entry were completed by the appraising groups before July 2019, the application filed by the claimant on 04.02.2020 was thus clearly barred by limitation in terms of section 27(1) ibid. It appears that an appeal was filed before the first apply authority challenging the above rejection order primarily urging that the finalisation of the bills of entry was never communicated to the appellant, but however, the same was intimated to the appellant vide communication dated 27.01.2020; considering that date as the finalisation of assessment, their application dated 04.08.2020 was within the period of limitation. Hence, they requested the first Appellate authority to reverse the rejection order passed by the original authority.

3. The first appellate authority after considering the plea of the appellant, vide Order-in-Appeal dated 09.01.2023, upheld the Order in Original, thereby rejecting the plea of the appellant. It is against this order that the present appeal has been filed before this forum. Heard Sri E. Ramesh, learned Advocate for the appellant and Shri Harendra Singh Pal, learned Assistant Commissioner (AR) for the Revenue.

4. The Only issue that arises for my consideration is, “whether the claim of the appellant is barred by limitation as held by the lower authorities?”

5. Firstly, I find from the order in original dated 10.03.2021 that nowhere has the original authority mentioned the date of finalisation of the bills of entry, although he has only mentioned that the finalisation was made before July 2019. Further, in the communication dated 27.01.2020 again, the deputy commissioner while intimating about the finalisation of the bills of entry, has asked the appellant to approach refund section insofar as refund of EDD was concerned. In this communication also there is no mention about the date of finalisation of the bills of entry; the lower authority has only talked about the finalisation in the above manner without mentioning about the date of finalisation of assessment, which is very conspicuously absent. Moreover, even the date of dispatch, if made, is also not whispered anywhere, to avoid controversies.

6. Thus, it is clear that none of the communications to the appellant indicates date of actual communication of the order in original dated 29.04.2015. Hence, the prima facie burden on the revenue to adduce proper evidence to show the actual date of communication of the Order in Original, not to speak of the date of dispatch, remains un-discharged. Even from the said Order in Original, I find that the authority passing the order has nowhere indicated about providing an opportunity of being heard, before passing the said order. Even this therefore appears to be an order passed by violating the principles of natural justice. It is thus not only the order appears to have passed in strict conformity with the established principles of law, but even the communication of the same is not at all proved anywhere. Same also appears to be irregular as authorities have quite conspicuously omitted to bring on record the actual date dispatch and the date of communication of the said order, with supporting documentary evidences.

7. In view of the above, I am constrained to accept the case of the appellant, since even up to the date of its request made in the year 2018 for finalisation, apparently, the appellant was not served with the copy of the said Order in Original. In that way of the matter, I have to only set aside the impugned order and the finding in so far as the denial of refund on the grounds of limitation is concerned, for the reason that Revenue has failed to prove or bring on record any of evidence in support of its claim that Order in Original was communicated on such and such a date and therefore, the application dated 04.08.2020 filed by the claimant was clearly hit by limitation within the meaning of section 27(1) ibid.

8. Resultantly, impugned order is set aside and the appeal is allowed with consequential benefit, if any, as per law.

(Order pronounced in open court on 24.04.2024)