Case Law Details

Case Name : DHL Express India Pvt Ltd Vs Commissioner of Service Tax (Karnataka High Court)
Appeal Number : CSTA NO.5/2018
Date of Judgement/Order : 05/03/2021
Related Assessment Year :

DHL Express India Pvt Ltd Vs Commissioner of Service Tax (Karnataka High Court)

In the present case, duty of customs payable on the transaction in question under the statute is Rs.4,743/-, which has been admitted by the respondent and on account of erroneous calculation, the duty has been paid in excess to the tune of Rs.42,26,975/-. The Authorities have turned down the claim of appellant on the ground of limitation. The claim of the appellant could have been corrected and the Tribunal has erred in observing that the payment of excess duty requires to be rectified under Section 154 of the said Act of 1962. The Authorities ought to have refunded the said excess amount to the appellant-Company either upon their application or on an application made by the importer. In the case of Mafatlal Industries Ltd. (supra), it has been held that in order to claim excess duty paid, which falls outside the purview of the said Act of 1962, the limitation provided under Section 27 is not applicable. Hence, the appellant-company is certainly entitled for refund of duty.

It is crystal clear that when the customs duty is paid in excess, the department is liable to refund the same and the limitation provided under Section 27 of the said Act of 1962 will not be applicable. Therefore, the Tribunal has erred in law and fact, solely relying on Section 27 of the said Act of 1962 while dismissing the application of the appellant-Company.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

The present appeal is arising out of the order dated 12.10.2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bengaluru, passed in Final Appeal No.22431/2017.

2. The facts of the case reveal that the appellant-Company before this Court is a Private Limited Company registered under the Companies Act, 1956. It is engaged in providing door to door international express courier service. The appellant-Company during the course of its business, carried out a shipment consigned to M/s. Bharat Earth Movers Limited (hereinafter referred to as ‘M/s. BEML’ for short) originated from Korea. The International Commercial Terms of the shipment was based on the principle of Delivered Duty Paid. The appellant-Company, based upon the authorization of M/s. BEML, arranged for the customs clearance of imported consignment through its customs house agent M/s. Skyline Air Logistics Ltd. by submitting a bill of entry for paying the duty of customs. The appellant-Company’s contention is that the current duty of customs payable on the value of cost specified in the bill of entry was at Rs. 4,743/-, as against which, the appellant-Company discharged duty of customs to the tune of Rs. 42,31,718/- resulting in excess payment of Rs. 42,26,975/- on account of arithmetical error while computing the liability. The appellant-Company has stated that the said duty was deposited vide TR 6 Challan No.98006935 on behalf of M/s. BEML, which is an importer. The goods were cleared vide bill of entry dated 5.3.2009. It has been stated by the appellant-Company that the excess payment of custom duty was due to clerical error. The appellant-Company wrongly applied the exchange rate while determining the assessable value in the bill of entry. The appellant-Company further submitted that the currency indicated in the invoice was KRW (Korean Krones) and KRW is not a listed currency. Hence, the importer obtained the exchange rate from Shinhan Bank wherein the exchange rate was indicated as KRW/Rs = 29.87. The appellant-Company worked out the assessable value for KRW 574368 as INR 1,73,27,936/-and paid the customs duty of Rs.42,31,718/-. The correct exchange rate was INR 0.033478 per KRW. The appellant-Company without noticing the said error, paid the duty and got the goods cleared. The original assessment has resulted in excess payment of customs duty to the tune of Rs.42,26,975/-.

3. The appellant-Company supplied the said goods to M/s. BEML and raised a bill for payment of service charges as also refund of the duty of customs paid on behalf of the importer and that M/s. BEML verified the claim and pointed the appellant-Company that the duty of customs payable would have been Rs.4,743/- and not Rs.42,31,718/-. M/s. BEML, being the importer, filed a refund claim on 16.4.2009 and also furnished a copy of confirmation of exchange rate issued by Shinhan Bank, New Delhi Branch. The Superintendent (Refunds) of the respondent-department requested M/s. BEML to produce reassessed copy of the bill of entry vide letter dated 23.4.2009 and M/s. BEML, as importer, approached the Customs Authorities for rectification of error in the original bill of entry and for issue of reassessment bill of entry vide requisition dated 13.5.2009. The Customs Authorities directed the importer to file an appeal before the Commissioner of Customs (Appeals) against the order of assessment of bill of entry and to get necessary directions. Thereafter, M/s. BEML through their authorized representative, filed an appeal before the Commissioner of Customs (Appeals), Bengaluru. The Appellate Commissioner, vide order dated 30.6.2009 set aside the order of assessment in respect of bill of entry dated 5.3.2009 and ordered for reassessment of bill of entry under Section 154 of the Customs Act, 1962 (hereinafter referred to as ‘said Act of 1962’ for short). M/s. BEML was required to file an application for refund within six months in terms of Section 27 of the said Act of 1962. However, an application was not filed by M/s. BEML for refund within six months for want of reassessed bill of entry which was not issued by the Assistant Commissioner. The Assistant Commissioner reassessed the bill of entry on 30.12.2009 correcting the assessable value at Rs.19,376/-. The contention of the appellant-Company is that as per the reassessed bill of entry, the correct assessable value works out to Rs.19,416/- and the actual customs duty payable is Rs.4,743/-. The appellant-Company, vide letter dated 31.12.2009 filed on 6.1.2010 before the Deputy Commissioner, sought for refund of excess duty. The contention of the appellant-Company is that this application has not been adjudicated by the Deputy Commissioner of Customs till date.

4. The Assistant Commissioner issued a show cause notice on 11.7.2011 in respect of the refund application dated 16.4.2009 filed by M/s. BEML alleging that M/s. BEML, as the importer, had not borne the incidence of customs duty and therefore, M/s. BEML is not eligible to claim the said refund under Section 27 of the said Act of It was stated that the customs duty was paid by the appellant-Company and excess duty was paid by it and therefore, was not entitled for reimbursement. M/s. BEML filed a detailed reply before the Assistant Commissioner objecting to the show cause notice and requesting for issuance of refund under Section 27 of the said Act of 1962 in favour of the present appellant-Company. M/s. BEML also submitted before the Assistant Commissioner that the duty of customs paid by appellant-Company was on behalf of the M/s. BEML and therefore, M/s. BEML has no objection with respect to the present appellant-Company claiming reimbursement of the excess duty. M/s. BEML filed a detailed reply on 18.1.2012. The Adjudicating Authority rejected the application filed by M/s. BEML on the ground that it has neither paid the duty nor borne the same. It was also resolved that M/s. BEML has not even accounted duty of customs in the books of accounts as receivables. Accordingly, the Adjudicating Authority held that the doctrine of unjust enrichment is not fulfilled. The order in original was passed by the Adjudicating Authority (Assistant Commissioner) on 13.03.2012.

5. That after the order was passed in the case of M/s. BEML, the present appellant-Company filed another refund application on 6.5.2012 after getting information from M/s. BEML that they would not be inclined to pursue remedy. The refund application preferred by the appellant-Company was rejected on the ground that the duty of customs was paid on 7.3.2009, whereas the application for refund was received on 6.6.2012. It is therefore barred by limitation under Section 27 of the said Act of 1962. The present appellant-Company, being aggrieved by the order passed by the Adjudicating Authority, preferred an appeal before the Commissioner of Customs (Appeals) in Appeal No.163/2013 and contended that non filing of the refund application in time will not disentitle the appellant-Company for refund. The other grounds were also raised by the appellant-Company. However, the Commissioner of Customs (Appeals) has dismissed the appeal by order dated 28.2.2013. A second appeal was preferred before the Appellate Tribunal and the Appellate Tribunal, vide impugned order dated 12.10.2017, has dismissed the appeal preferred by the appellant-Company upholding the orders passed by the Authorities below.

6. This Court has admitted the appeal on the following substantial questions of law.

(i) Whether authorities below were correct and justified in rejecting the application filed by appellant for refund by applying Section 27 of the Customs Act, 1962 ?

(ii) Whether refund application filed on 06.01.2010 by appellant before the Deputy Commissioner of Customs, Refund Section, Bangalore was within the period of limitation specified under Section 27 of the Customs Act, 1962 ?

7. The Tribunal, while dismissing the appeal preferred by the present appellant, in paragraphs-4 to 7 of the impugned order, has held as under:

“ 4. Learned counsel for the appellant submitted that the impugned order is not submitted that the impugned order is not sustainable in law as the same has been passed without considering the facts and circumstances and the position of law. He further submitted that the appellants have furnished all the documents which were required for claiming the refund. He further submitted that the appellants are the agents of M/s.BEML who are the importers and the owners of the goods and the duty was paid by them on behalf of M/s.BEML as their agent. He also submitted that the appellants are well within their right to file the refund of excess duty in terms of Section 27 of the Customs Act, 1962. He further submitted that once amendment to the Bill of Entry is permitted the excess duty is liable to be refunded without an application for refund under Section 27 of the Customs Act. He also submitted that the excess duty paid on account of clerical error is only a deposit and not the duty and therefore the provisions of Section 27 of the Customs Act are not applicable. He also submitted that BEML had also filed a refund application on 16.04.2009 but their claim was rejected on 13.03.2012 on the ground that they have neither paid the duty nor borne the duty in terms of Section 27 of the Act. In support of his submission, the learned counsel for the appellant relied upon the following decisions:

a) INA Bearings (India) Pvt. Ltd., Vs. CC (Import), Nhava Sheva- 2014 (313) E.L.T. 815 (Mumbai)

b) Keshari Steels Vs. CC, Bombay- 2000 (115) E.L.T. 320 (Bom.)

c) Collector V. Keshari Steels- 2000 (121) E.L.T. A139 (S.C)

5. On the other hand the learned defended the impugned order and submitted that the refund claim field by the appellant is clearly time-bared and therefore has been rightly rejected by both the authorities. He further submitted that the appellant filed the refund claim on 06.05.2012 after a lapse of about three years from the date of payment of duty. He further submitted that the reassessment was made on 30.12.2009 consequent to the issue of Order-in-Appeal dated 30.06.2009 passed by the Commissioner (Appeals).

6. After considering the submissions of both the parties and perusal of the impugned order, I find that in the present case, the appellants have filed the refund claim on 06.05.2012 whereas originally M/s. BEML filed the refund claim which was rejected by Assistant Commissioner vide his Order-in-Original dated 13.03.2012 on the ground that BEML has neither paid the duty nor borne the duty. I also find that after the rejection of refund claim on 06.05.2012 whereas re-assessment was made on 30.12.2009 which according to me is barred by Section 27. Further I also find that as per Section 27 of the Customs Act, the time for filing the refund claim has to be strictly followed and the argument of the learned counsel for the appellant saying that it was only a deposit and not the duty is not tenable in law. I also find that the learned Commissioner (Appeals) has considered all the decisions relied upon by the appellant and has rightly come to the conclusion that the time limit as prescribed under Section 27 of the Customs Act is applicable in the present case. Further the learned Commissioner has observed that the present case is covered by the decision of the Tribunal in the case of Minerals & Metals Trading Corporation of India Vs. CC reported in 1993 (66) E.L.T. 89 and the relevant para is reproduced herein below:

9. Section 154 only mentions about corrections of clerical and arithmetical error and it does not mention about the consequential relief of refund of those amounts which accured due to the above said corrections. The Supreme Court has also held in the Doaba Cooperative Sugar Mills’ case that if the payment of duty was made under a mistake of law the appellant may seek recourse to such an alternative remedy. In this case, even though the payment of duty is due to arithmetical or clerical mistake, still the only provisions for refund under the Customs Act is Section 27 of the Customs Act, 1962 and there is no other provision providing for a refund by the Customs authorities under the above mentioned Act. In such cases, the parties filing refund applications have to be regulated and restricted to the time limit provided under the Act. The Supreme Court has upheld the decision of this Tribunal reported in 1983 (13) E.L.T. 1026 in the case of Miles India Ltd., V. Appellate Collector of Customs. It was held in that decision by the Tribunal that any claim filed before the Customs authorities for refund of the excise duty has to be treated under Section 27 of the Customs Act because there is no other provision providing for application for refund before the Customs authorities and the parties filing such refund claim are to be regulated and restricted to the time limit provided therein. The Hon’ble Supreme Court upheld this decision by holding that there were no infirmities in the findings of this Tribunal. This was again reaffirmed by the Supreme Court in the Doaba Cooperative Sugar Mills’ case. In such circumstances, we are of the view that the only section for refund of the excess duty paid by the appellant, is Section 27 of the Customs Act, 1962 and there is no other provision providing for such refund by the Customs authorities. Section 154 speaks of only clerical or arithmetical directions. In such circumstances, the application for refund being beyond the time limit was rejected by the lower authorities. We also observe that merely because the Bill of Entry was corrected in view of Section 154 of the Customs Act, 1962, the refund cannot be granted beyond the period of limitation contemplated under Section 27 of the Customs Act, 1962 and there is no case made out to interfere with the orders passed by the learned Collector of Customs (Appeals). In the result, the appeal is rejected.”

Further I also find that the decision relied upon by the appellants are not applicable in the facts and circumstances of this case and are distinguishable.

7. In view of my discussion above, I find no infirmity in the impugned order which is upheld by dismissing the appeal of the appellant.”

8. Learned Counsel for the appellant-Company has argued before this Court that the Tribunal has miserably failed to appreciate the ratio of law laid down by the Hon’ble Supreme Court in case of MAFATLAL INDUSTRIES LTD. Vs. UNION OF INDIA reported in 1997 (89) ELT 247 wherein it has been categorically held that for refund of the amounts/duty paid without authority of law, the relevant provisions applicable are of the Limitation Act and not the one specified under Section 27 of the said Act of 1962. It has been vehemently argued that the authorities have miserably failed in rejecting the application for refund of duty taking shelter of technical glitches in making a claim for refund and the same is opposed to legal precedents and the same is not justified. It has been also argued that in the present case, the duty of the customs payable on the transaction in question under the statute is only Rs.4,743/- and therefore, the payment of duty over and above the aforesaid amount paid by the appellant is also beyond the statute and thus, retention of the same excess amount by the respondent-Authority is without authority of law. The learned Counsel has also placed reliance upon the following judgments:

(i) Commissioner OF Central Excise (Appeals) Vs. KVR Construction reported in 2012 (26) STR 195 (KAR)

(ii) Geogit BNP Paribhas Financial Services Ltd. Vs. CCE reported in 2015 (39) STR 706.

(iii) Hind Agro Industries Limited Vs. Commissioner of Customs reported in 2008 (221) STR 336

(iv) B. Engineers Vs. UOI reported in 2016 (43) STR 345

(V) Joshi  Technologies International Vs. UOI reported in 2016 (339) ELT 21

9. The learned Counsel has prayed for quashment of the order passed by the respondent-Authorities. On the other hand, learned Counsel for the respondent-Revenue has vehemently argued before this Court that the Authorities are justified in rejecting the claim of the appellant keeping in view Section 27 of the said Act of 1962 and by no stretch of imagination, the question of refund arises in the facts and circumstances of the case. The learned Counsel has also placed reliance upon the judgment in case of Mafatlal Industries Ltd. (supra) and he has supported the orders passed by the Authorities in the matter.

10. Heard the learned Counsel for the parties at length and perused the records.

11. In the present case, the undisputed facts reveal that the appellant-Company has carried out a shipment consignment on behalf of M/s. BEML. The appellant-Company, based upon the authorization of M/s. BEML, arranged for the customs clearance of imported consignment through its customs house agent M/s. Skyline Air Logistics Ltd. by submitting a bill of entry for paying the duty of customs. Unfortunately, on account of erroneous calculation based upon the details furnished by the Bank, duty of customs was paid to the tune of Rs.42,31,718/- resulting in excess payment of Rs.42,26,975/-. It has been admitted by the learned Counsel for the respondent that the aforesaid amount was paid on account of arithmetical error while computing liability. The excess amount was paid vide bill of entry dated 5.3.2009. The appellant-Company supplied the said goods to M/s. BEML and raised a bill for payment of service charges as also refund of the duty of customs paid on behalf of the importer and that M/s. BEML verified the claim and they honestly paid duty under the said Act of 1962 in excess.

12. M/s. BEML, with quite promptitude, filed a refund claim on 16.4.2009 and also furnished a copy of confirmation of exchange rate issued by Shinhan Bank, New Delhi Branch. The Superintendent (Refunds) of the respondent-department requested M/s. BEML to produce reassessed copy of the bill of entry vide letter dated 23.4.2009 and M/s. BEML, as an importer, approached the Customs Authorities for rectification of error in the original bill of entry and for issue of reassessment bill of entry vide requisition dated 13.5.2009. The Customs Authorities directed the importer to file an appeal before the Commissioner of Customs (Appeals) against the order of assessment of bill of entry and to get necessary directions. However, the fact remains that finally the department has not refunded the amount and the appellant Company vide its letter dated 31.12.2009 filed on 6.1.2010 before the Deputy Commissioner, sought for refund of excess duty. Meaning thereby, the prayer of M/s.BEML has been turned down on the ground of limitation and finally, the application submitted by the appellant-Company has also been rejected by the competent authority. The refund application preferred by the appellant-Company was rejected on the ground that the duty of the customs was paid on 7.3.2009 whereas the refund application was received on 6.6.2012 meaning thereby, not within the period of limitation under Section 27 of the said Act of 1962. The matter has travelled up to Tribunal and the Tribunal has decided against the appellant Company.

13. Section 27 of the said Act of 1962 reads as under:

27. Claim for refund of duty.—

(1) Any person claiming refund of any duty or interest, —

(a) paid by him; or

(b) borne by him,

may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest:

Provided that where an application for refund has been made before the date on which the Finance Bill, 2011 receives the assent of the President, such application shall be deemed to have been made under sub­section (1), as it stood before the date on which the Finance Bill, 2011 receives the assent of the President and the same shall be dealt with in accordance with the provisions of sub-section (2):

Provided further that the limitation of one year shall not apply where any duty or interest has been paid under protest:

[Provided also that where the amount of refund claimed is less than rupees one hundred, the same shall not be refunded.]

Explanation.–For the purposes of this sub-section, “the date of payment of duty or interest” in relation to a person, other than the importer, shall be construed as “the date of purchase of goods” by such person.

(1-A) The application under sub-section (1) shall be accompanied by such documentary or other evidence (including the documents referred to in section 28C) as the applicant may furnish to establish that the amount of duty or interest, in relation to which such refund is claimed was collected from, or paid by him and the incidence of such duty or interest, has not been passed on by him to any other person.

(1-B) Save as otherwise provided in this section, the period of limitation of one year shall be computed in the following manner, namely:-

(a) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 25, the limitation of one year shall be computed from the date of issue of such order;

(b) where the duty becomes refundable as a consequence of any judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year shall be computed from the date of such judgment, decree, order or direction;

(c) where any duty is paid provisionally under section 18, the limitation of one year shall be computed from the date of adjustment of duty after the final assessment thereof or in case of re-assessment, from the date of such re-assessment.]

(2) If, on receipt of any such application, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied that the whole or any part of the duty and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund:

Provided that the amount of duty and interest, if any, paid on such duty as determined by the Assistant Commissioner of Customs or Deputy Commissioner of Customs under the foregoing provisions of this sub­section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to —

(a) the duty and interest, if any, paid on such duty paid by the importer, or the exporter, as the case may be if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;

(b) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use;

(c) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;

(d) the export duty as specified in section 26;

(e) drawback of duty payable under sections 74 and 75;

(f) the duty and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify;

Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person.

(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal, [National Tax Tribunal] or any Court or in any other provision of this Act or the regulations made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).

(4) Every notification under clause (f) of the first proviso to sub-section (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder.

(5) For the removal of doubts, it is hereby declared that any notification issued under clause (f) of the first proviso to sub­section (2), including any such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette.]

14. In the considered onion of this Court, in the light of the judgment of Mafatlal Industries Ltd. (supra), wherein it has been categorically held that for refund of the amount, the duty paid without authority of law, the refund provisions under Section 27 of the said Act of 1962 are not applicable and the limitation applicable is in terms of the Limitation Act and not one year specified under Section 27 of the said Act of 1962.

15. In the present case, duty of customs payable on the transaction in question under the statute is Rs.4,743/-, which has been admitted by the respondent and on account of erroneous calculation, the duty has been paid in excess to the tune of Rs.42,26,975/-. The Authorities have turned down the claim of appellant on the ground of limitation. The claim of the appellant could have been corrected and the Tribunal has erred in observing that the payment of excess duty requires to be rectified under Section 154 of the said Act of 1962. The Authorities ought to have refunded the said excess amount to the appellant-Company either upon their application or on an application made by the importer. In the case of Mafatlal Industries Ltd. (supra), it has been held that in order to claim excess duty paid, which falls outside the purview of the said Act of 1962, the limitation provided under Section 27 is not applicable. Hence, the appellant-company is certainly entitled for refund of duty.

16. In the case of KVR Construction (supra), this Court relying upon the judgment of the Hon’ble Supreme Court in the case of Mafatlal Industries Ltd. (supra) has held as under:

“23. ……….  When once there was no compulsion or duty cast to pay this service tax, the amount of Rs.1,23,96,948/- paid by Appellant under mistaken notion, would not be at duty or ‘service tax’ payable in law. Therefore, once it is not payable in law there was no authority for the Department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attack section 11 B. Therefore, it is outside the purview of section 11B of the Act.”

In the case of Geojit BNP Paribhas Financial Services Ltd (supra), the Kerala High Court following the judgment of the Hon’ble Supreme Court in the case of Mafatlal Industries Ltd. (supra) has held as under;

“8. ……….  In this case, the levy was purely on account of mistake of fact in understanding the law. The Appellant assumed that the transaction for which he has paid tax, is covered under the law. The law does not cover such transaction for payment of service Tax. Therefore, it is not on account of any mistake of law but mistake of fact that the service tax was paid. In that view of the matter it has no colour of tax for the purposes of levy by the Department. The distinguishing feature for attracting the provisions under Section 11 B is that the levy should have the colour of validity when it was paid and only consequent upon interpretation of law or adjudication, the levy is liable to be ordered as refund. When payment was affected, if it has no colour of legality, Section 11 B is not attracted. This court is also of the view that levy is not in accordance with the provisions of the service tax and therefore such payment cannot be taken as a payment made relatable to section 11 B of the Central Excise Act.”

Further, in the case of Hind Agro Industries Limited (supra), the High Court of Delhi, while considering similar refund claim under the Customs Act, has held as under;

“10. There can be no doubt that the above provision applies to a claim for refund of ‘any duty’ within the meaning of that Act. A word ‘duty’ has been defined under Section 2(15) of the Act means, ‘a duty of customs leviable under this Act.’ The entire Section 27 of the Act can, therefore, obviously apply if and only if, the refund that is being sought is of customs duty otherwise leviable under the Act.

11. The CESTAT has, in the impugned order, failed to appreciate this legal position and has erred in holding that all applications for refund of any payment mistakenly made to the customs authorities have to be made and processed under Section 27 of the Customs Act. This is also based on an erroneous understanding of the judgment of the Hon’ble Supreme Court in Assistant Collector of Customs v. Anam Electrical Manufacturing Co. – 1997 (90) E.L.T. 260 (S.C.) which is a format order disposing of the appeals forming part of the batch of matters in which the judgment of the Constitution Bench in Mafatlal Industries V. Union of India-1997 (89) E.L.T. 247 was rendered

16. There can be no manner of doubt that the custom authorities in the instant case were bound to refund the cess erroneously paid by the Appellants for the period from 15th January, 2001 till 19th February 2002 under a mistake of law. They had paid the cess when in fact no such cess was payable. There is no question of processing a claim of refund of such amount in terms of the Customs Act at all because the payment made mistakenly was not under that Act. In the circumstances, the period of limitation under Section 27 of the Act would not apply, as explained in Salonah Tea Company Limited……. ”

In the case of G B Engineers (supra), the High Court of Jharkhand has held as under;

“9. Section 11 B of the Central Excise Act to be read with section 83 of the Finance Act, 1994 are not applicable to the facts of the present case because, the amount paid by the Appellant is never under the Central Excise Act nor under the service tax (provisions) when there is no liability to make the payment of the amount and under the mistake of facts or under mistake of law or under both if any amount is deposited by the assessee, the same cannot be retained by Union of India and the one or the other pretext when a service provider is not liable to make the payment of service tax and if any payment is made, it cannot be covered under section 11 B of the Central Excise Act to be read with section 83 of the Finance Act, 1994.”

In the case of Joshi Technologies International (surpa), while considering the question of the refund claim of the Appellant being barred by limitation, the Gujarat High Court has held as under;

“11. Since the machinery provisions of the Central Excise Act, 1944 have been incorporated in the OID Act and consequently the Education Cess and Secondary and Higher Secondary Education Cess had been paid to the Central Excise authorities, the Appellant was wholly justified in making the application for the refund to the second respondent. However, merely because the application is made to an authority under the Central Excise Act, the same would not lead to an inference that the application has been made under the provisions of the Central Excise Act, 1944 so as to make the provisions of appeal, etc., applicable. In the present case, there was no liability to pay Education Cess or Secondary and Higher Secondary Education Cess on the part of the Appellant. Under Section 93 of the Finance Act, 2004 and Section 138 of the Finance Act, 2007, Education Cess and Secondary and Higher Secondary Education Cess levied there under are treated as duties of excise. The Appellant having paid Education Cess and Secondary and Higher Secondary Education Cess under a mistake of law without there being any liability on the part of the Appellant to pay such amount, the amount paid by the Appellant would not take the colour of a duty of excise and would merely be an amount deposited by the Appellant under a mistake of law. Under the circumstances, the provisions of the CE Act would not be applicable when the Appellant seeks refund of such amount.

11.3 In the light of the principles enunciated in the above decisions, having regard to the fact that in the facts of the present case, the refund is claimed on the ground that the amount was paid under a mistake of law and such claim being outside the purview of the enactment, can be made either by way of a suit or by way of a writ Appeal. Under the circumstances, the Appellant is justified in filing the present Appeal before this court against the order passed by the adjudicating authority rejecting its claim for refund of the amount paid under a mistake.”

17. In the light of the law laid down by the Hon’ble Supreme Court and the other High Courts keeping in view the peculiar facts and circumstances of the case, it is crystal clear that when the customs duty is paid in excess, the department is liable to refund the same and the limitation provided under Section 27 of the said Act of 1962 will not be applicable. Therefore, the Tribunal has erred in law and fact, solely relying on Section 27 of the said Act of 1962 while dismissing the application of the appellant-Company.

18. In the present case, as already stated earlier, the excess customs duty was paid mistakenly on account of certain error and the said mistake can be rectified under Section 154 as held by the Bombay High Court in case of KESHARI STEELS VS. COLLECTOR OF CUSTOMS reported in 2000 (115) ELT 320.  The aforesaid judgment has been confirmed by the Hon’ble Supreme Court in an SLP reported in 2000 (121) ELT A 139.

19. Keeping in view the totality of the facts and circumstances of the case, this Court is of the considered opinion that the appellant was not at fault in the matter at all. M/s.BEML was directed to file refund application at the first instance. If the department would have advised the appellant to file an application for refund, then there would not have been any delay. The appellant was running from pillar to post to get refund of the excess stamp duty and the department is certainly not entitled for retention of the excess amount.

20. In the considered opinion of this Court, the substantial questions of law are answered in favour of the appellant and against the revenue.

21. Accordingly, the appeal is allowed. The impugned order is set aside.

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