Case Law Details
Jindal Stainless Limited Vs Commissioner of Customs (CESTAT Hyderabad)
Introduction: The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Hyderabad recently allowed a refund claim by Jindal Stainless Limited, originally rejected due to delays attributed to the Covid-19 pandemic. Jindal Stainless Limited had challenged the Order-in-Appeal passed by the Commissioner of Customs (Appeals) Guntur, arguing that the original authority and the first appellate authority passed orders with a revenue bias, ignoring the impact of the pandemic on filing timelines.
Analysis: The case hinged on the interpretation of Section 27 of the Customs Act 1962, which permits a refund of customs duty or interest paid. The appellant’s legal counsel argued that a delay in filing the refund claim should not be applicable due to the Supreme Court’s suo motu order dated 10/01/2022, excluding the pandemic period from computing the prescribed period of limitation under various laws. The revenue authority’s stance was contradictory, claiming that the late fee did not qualify as customs duty or interest, thus refund of late fee is not covered by Section 27, while simultaneously arguing that the assessment could not be challenged without challenging the order of assessment.
The court ruled in favor of Jindal Stainless Limited, stating that the refund claim was a simple return of the amount paid by the appellant under a mistaken notion of law and thus was subject to general principles of restitution.
FULL TEXT OF THE CESTAT HYDERABAD ORDER
The appellant challenged the Order-in-Appeal dated 21/07/2022 passed by Commissioner of Customs (Appeals) Guntur.
2. Vide public notice no.21/2020 dated 26/03/2020, late filing fee in respect of bills of entry was waived in view of the COVID-19 pandemic . The facility of such waiver was withdrawn by public notice dated 10/062020. Meanwhile, the appellant’s CHA could not file the bills of entry in time and accordingly late fee of Rs. 12,77,591/- was paid as the appellants were not aware of the waiver of late fee vide public notice cited above . On realising the mistake, the appellants filed a refund claim for the above amount on 24/08/2021. A show cause notice dated 07/01/2022 was issued to the appellant and the original Adjudicating Authority rejected the refund claim in terms of the show cause notice. An appeal filed by the appellants before the First Appellate Authority came to be rejected. Hence, this appeal.
3. Shri N V Ramana Rao, learned Counsel, appearing on the behalf of the appellant would submit that the Original Authority and the First Appellate Authority passed the orders with a revenue bias without following the judicial discipline and without considering the submissions of the appellant. He submits that Hon’ble Supreme court vide suo motu order dated 10/01/2022 ordered that the period from 15/03/2020 to 28/02/2022 shall stand excluded in computing the prescribed period of limitation under various laws ; If the order is followed , there is no delay in filing the refund claim.
4. He further submits that Commissioner (Appeals) traversed beyond the scope of show cause notice while rejecting the appeal by considering factors which were not agitated in the procedures; Revenue shifted their stand at different stages; Department completely ignored the judicial pronouncements that the limitation under Section 11B of Central Excise Act, 1944 or for that matter Section 27 of Customs Act, 1962, to the cases involving tax paid under a mistaken notion of law. He further submits that even though it was clear that the late fee was paid when not payable, the department did not accede to the request for reassessment; rejecting the refund of tax/amount paid under a mistaken notion of law, is contrary to the Article 265 of the Constitution of India.
5. Shri P Amaresh , Authorised Representative, appearing for the revenue submits that the application dated 24/08/2021 was time barred ; It should have been filed before 01/05/2020 i.e; within one year of payment of late fee on 30/04/2021.
6. He further submits that Section 27 of the Customs Act 1962 envisaged refund of customs duty or interest paid thereof . The late fee paid by the applicant does not take the colour of Customs duty or interest. He would also submit that the appellant have not availed the provisions for the waiver of late fee in terms of Section 46(3) of the Customs Act, 1962 and Regulation 4(3) of the bill of entry (electronic integrated declaration and paperless processing) Regulations , 2018 or the public notice dated 26/03/2020. He further submits that challenging the assessment order including self assessment is a prerequisite for refund claim of any amounts; as the order was not challenged, refund cannot be sanctioned under Section 27 ibid. He relies upon the following case law.
- M/s ITC Limited-2019 (368) ELT 216 (SC).
- M/s Priya Blue Industries Limited-2002 (148) ELT 809 (Tri. Delhi)
- M/s Mafatlal Industries Limited- 1997 (89) ELT 247 (SC).
- CC Vs India United Mills- 1986 (24) ELT 436 (Tribunal)
- M/s Geojit BNP Paribas Financial Services Limited-2015 (39) STR 706 (Kerala)
7. Heard both sides and perused the records of the case. The appellants filed a refund claim on 24/08/2021 for the late fee mistakenly paid on 01/05/2020; the late fees for filing the bills of entry was waived vide Public Notice No. 21/2020 dated 28/03/2020. The fact of payment of late fee in spite of the waiver is not disputed. Vide letter dated 22/09/2021, the refund application was returned to the appellants stating certain deficiencies. The appellant applied for re-assessment of the bills of entry for the mistake apparent on record vide their letter dated 21/09/2021. The appellants were advised vide letter dated 29/09/2021 to approach the proper officer; vide letter dated 30/11/2021 the appellants informed that they were informed by the Deputy Commissioner in charge of the assessment group that there is no provision for re-assessment of bills of entry in the electronic system. All these facts were not denied by the Department.
8. The Original Authority finds that Section 27 of the Customs Act 1962, does not provide for any refund of such nature as , the late fee is neither a duty or interest thereof ; Even if the provisions of Section 27 are applicable, the application is time barred in view of the Hon’ble Supreme Court judgement in the case of Mafatlal Industries 1997 (89) ELT 247 (SC); unless the original assessment is challenged, refund cannot be granted in view of the Hon’ble Supreme Court judgement in the case of ITC ltd. 2019 (368) ELT 216 (SC). It is the argument of the appellant that the department cannot retain the amount paid under a mistaken notion of law and that the refund claim is not time barred in view of the suo motu Order date 10/01/2022 by the Hon’ble Supreme Court wherein it was ordered that, due to the existing pandemic, the period from 15/03/2020 to 28/02/2022 stand excluded in computing the prescribed periods of limitation .
9. I find that the issue involved here is not refund of duty or an interest thereof but a simple return of the amount paid by the appellant under mistaken notion of law. This is governed by the general principles of restitution as in the case of refund of deposits, fines and penalties. I find that the Revenue is taking a contradictory stand in as much as on the one hand, it claims that the refund of late fees is not governed by the provisions of Section 27 of the Customs Act 1962 and on the other, they find that the order of assessment being not challenged, they cannot be challenged by taking the route of refund. I find that even taking into account the cases relied upon by the Revenue, the issue does not pertain to the refund of duty as provided in Section 27 ibid. When the refund is not covered by Section 27, as revenue content, the question of challenging the assessment does not arise. Moreover, it is on record that the appellant has sought for reassessment of the bills of entry which were denied to the appellant saying that there was no provision in the system. Thus, the stand of the Department is not only contradictory to their own argument but also legally not acceptable.
10. As stated above, the issue is of a simple restitution. Even if one argues that the limitation provided in Section 27 is applicable to any type of refund. The Hon’ble Supreme Court’s order on exclusion of the limitation period in view of the pandemic comes into picture. In view of the Supreme Court order, it had to be held that the refund is not hit by the limitation. As the issue involved is not of assessment of duty on classification, valuation of goods, the challenge of the assessment is not warranted. It is humbly opined that the ITC case does not cover such situations. Moreover, the appellant’s application for reassessment has been rejected. Therefore, it is not open for the Department to say that the order is not challenged.
11. In view of the above, I find that the appeal succeeds on both counts i.e, limitation and merit. Hence, I allow the appeal.
(Pronounced in the open Court on 13.07.2023)
