Case Law Details
Saraswati Knitwear Pvt Ltd Vs Commissioner of Customs (CESTAT Chandigarh)
Introduction: The case of Saraswati Knitwear Pvt Ltd vs. Commissioner of Customs (CESTAT Chandigarh) revolves around the entitlement to interest on excess duty paid during the clearance of yarn. The dispute centers on whether the appellant, Saraswati Knitwear Pvt Ltd, is eligible for interest on the refund of excess duty paid. This article delves into the detailed analysis of the case and the decision reached by CESTAT Chandigarh.
Detailed Analysis:
1. Background: The appellant, Saraswati Knitwear Pvt Ltd, filed five Bills of Entry on June 9, 2011, for the clearance of 100% PCT Polyester Spun NE 30/1 Yarn Raw White on Cones falling under CTH 55094190. The declared value appeared lower, leading to provisional assessments at a higher rate of USD 2.60 per Kg. The appellant paid the assessed duty via various challans on November 29 and 30, 2011.
2. Appeal Against Excess Duty: Dissatisfied with the provisional assessment, the appellant appealed to the Commissioner (Appeals) against the excess duty charged. The Commissioner (Appeals) directed the assessing officer to finalize the assessment and emphasized that the question of refund would only arise after adjusting the provisionally assessed duty, as per Section 18(2)(a) of the Customs Act, 1962.
3. Final Assessment and Refund Application: Following the Order-in-Appeal, the assessing officer finalized the assessment of Bills of Entry on December 29, 2021, at a rate of USD 1.40 per kg, an assessment accepted by the appellant. Subsequently, on January 12, 2022, the appellant filed a refund application for the excess duty paid beyond $1.40 per kg. The Adjudicating Authority raised some deficiencies in the application, which were subsequently addressed. The authority, through an order-in-original dated March 14, 2022, sanctioned the refund claim, totaling Rs. 13,22,041/-, comprising Rs. 12,37,420/- as excess duty paid and Rs. 84,621/- as excess interest paid.
4. Contentions: The appellant argued that the impugned order was legally unsustainable, as it failed to adequately consider the facts and the law. They contended that they were entitled to interest on the refund amount, considering the extended time taken for finalizing the assessment, causing delay in granting the refund. The appellant cited several decisions supporting their stance.
5. Counterarguments: The Department reiterated the findings of the impugned order, emphasizing the provisions of Section 18 of the Customs Act, 1962. They argued that interest was only payable if a refund was not granted within three months from the final assessment, as specified in Section 18(4).
6. Legal Provisions: The pertinent legal provision, Section 18 of the Customs Act, allows for provisional assessment and the subsequent finalization of duty. It also outlines the conditions for interest payment, particularly Section 18(4), which mandates interest if a refundable amount is not returned within three months from the final assessment.
7. Decision of CESTAT: The CESTAT, after reviewing both parties’ submissions and examining the statutory provisions, determined that the appellant’s claim for interest was not valid. The final assessment was completed on December 29, 2021, and the refund was sanctioned on March 14, 2022, within the three-month limit stipulated by Section 18(4). The CESTAT also noted that the appellant was provisionally assessed under Section 18 of the Customs Act.
8. Precedent: The CESTAT emphasized the applicability of decisions such as CCE vs. IOCL (2012) and other cases cited by the Department. These cases highlighted the refund process under Section 18 of the Customs Act and the conditions for interest payment.
Conclusion: In the case of Saraswati Knitwear Pvt Ltd vs. Commissioner of Customs (CESTAT Chandigarh), the appellant’s claim for interest on excess duty paid was dismissed by CESTAT Chandigarh. The CESTAT upheld the legality of the impugned order, emphasizing that the refund was granted within the three-month timeframe specified in Section 18(4) of the Customs Act. This case underscores the importance of understanding the statutory provisions governing customs assessments and the conditions for interest payments on refunds.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the impugned order dated 21.02.2013 passed by the Commissioner (Appeals) of Customs, Ludhiana whereby the Ld. Commissioner (Appeals) has rejected the appeal of the appellant by holding that the appellant is not entitled to interest on refund.
2. Brief facts of the case are that the appellant had filed 05 Bills of Entry on 09.06.2011 for clearance of 100% PCT Polyester Spun NE 30/1, Yarn Raw White on Cones falling under CTH 55094190. The value declared by the Appellant @ USD 1.25 per Kg appeared on lower side and thus B/Es were provisionally assessed @ USD 2.60 per Kg.
The duty so assessed was paid by the Appellant vide various challans dated 29.11.2011 & 30.11.2011.
- Being aggrieved with the provisional assessment of the Bills of Entry @ USD 2.60 per Kg, the appellant filed an appeal before the Commissioner (Appeals) protesting against the excess duty charged.
- The Commissioner (Appeals) vide OIA No 10-14/Appl/Cus(D) Comp Chd/13 dated 21.02.2013 directed the assessing officer to finalize the assessment at the earliest and opined that question of refund of excess duty paid, if any, will arise only after the adjustment of provisionally assessed duty under clause(a) of sub-section (2) of Section 18 of Customs Act, 1962.
- In pursuance to the Order-in-Appeal dated 21.02.2013, Assessing Officer finalized the assessment of Bills of Entry on 29.12.2021 @ 1.40 USD/Kg, which was accepted by the appellant. Thereafter, the appellant filed the refund application on 12.01.2022 of excess duty paid over $1.40 per kg. On refund application, some deficiencies were raised and after meeting out the queries Adjudicating Authority vide order-in-original dated 14.03.2022 sanctioned the refund claim of Rs 13,22,041/- Rs. 1237420/- excess duty paid + excess Interest Paid of Rs.84621/-).
- Hence, the present Appeal.
3. Heard the parties and perused the records.
4. Ld. Counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the appellant is entitled to interest on the refund amount which was paid during investigation or during adjudication proceedings. He further submitted that the department took undue long period of more than 8 years in finalizing the assessment which has caused delay in granting of refund. He further cited number of decisions holding that the amount deposited during investigation, if ultimately found not sustainable, is to be treated as revenue deposit and the same is to be refunded with interest. In support of this submission, he relied upon by the following decisions:-
- Calcutta Iron & Steel Company vs. CESTAT Chennai
- JK Cement vs. CCE & CGST
- Sandvik Asia Ltd. vs. Commr. Of Income Tax
- Parle Agro Pvt. Ltd. vs. CCE, Noida
- Supertron Electronics Pvt. Ltd. vs. UOI
5. On the other hand, the Ld. DR reiterated the findings in the impugned order and submitted that the provisional assessment and final assessment are common phenomena in Customs and are governed under Section 18 of the Customs Act, 1962. He further submitted that Section 18 prescribes all the provisions w.r.t. provisional assessment and final assessment and grant of refund and interest thereon as the case may be. He also submits that Sub-section 4 of Section 18 clearly specifies that interest is payable only if refund is not granted within 3 months from the final assessment. He further submits that the interest rate has also been prescribed in this subsection at the rate specified in Section 27A of the Act. He further submitted that there is no delay in granting the refund.
- He further submitted that the assessment in this case was finalized on 29.12.2021 @1.40/kg which were accepted by the appellant. In pursuance to this final assessment, the appellant filed refund claim dated 12.01.2022 seeking refund of differential excess duty and the said amount was refunded to the appellant vide OIO dated 14.03.2022 i.e. within 3 months from the final assessment. He further submitted that once the refund has been granted as per Section 18 and 27A of the Act within 3 months from the date of final assessment then the appellant cannot claim any interest. For this Submission, the Ld. DR relied upon the following decisions:-
- Ajay Exports Vs CC Import Nhava Sheva [2015 (330) ELT 225 (Tr. Mum)]
- CC Vs IOCL [2012 (282) E.L.T368 (Del)]
- Bochasanwasi Shri Aksharpurushottam Swaminarayan Sanstha Vs CC Ahmedabad [2022 (380) E.L.T82 (Tri. -Ahmd.)
- Ajay Exports Vs CC Import Mumbai [2016 (335) ELT 150 (Tr. Mum)
- Pride Foramer Vs CC Import Mumbai [Order dated 14.06.2010 in WP No. 2629/2006
- CC (Export) Chennai Vs Sayonara Exports Pvt Ltd. [2015 (321) ELT 583 (Mad.)
- M/s.. Nirma Ltd. Vs. CC Jamnagar (Prev.) [MANU/CS/0008/2022
- Veer Overseas Ltd. Versus CCE, Panchkula [2018 (15) G.S.T.L. 59 (Tri. – Lb)
- UOI vs. Cosmo Films Limited vide order dated 28.04.2023 (SC) Ld. DR submits on the question of delay in finalizing the assessment which could not be done due to alert Circular No. 09/2011-CI dated 26.07.2011 issued by the DRI on such import consignment, due to which this provisional assessment was kept pending.
Ld. DR further submitted that the decision relied upon by the appellant are not applicable in the facts and circumstances of the case because none of the judgements relied upon by the appellant are under provisional assessment as provided under Section 18 of the Customs Act, 1962.
6. After considering the submissions of both the parties and perusal of material on record, I find that in the present case, the assessment was finalized on 29.12.2021 and in pursuance to the final assessment refund was sanctioned to the appellant vide OIO dated 14.03.2022 which is within the time limit of 3 months from the date of final assessment. The original authorities rejected the request of interest and vide impugned order; the Commissioner has also rejected the appeal seeking grant of interest on delayed refund. Further, I find that the appellant was provisionally assessed under Section 18 of the Customs Act. The relevant provisions of the Customs Act are reproduced herein below:-
Section 18. Provisional assessment of duty
1 [(1) Notwithstanding anything contained in this Act but without prejudice to the provisions of section 46 2 [and section 50],–
(a) where the importer or exporter is unable to make self-assessment under sub-section (1) of section 17 and makes a request in writing to the proper officer for assessment; or
(b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test; or
(c) where the importer or exporter has produced all the necessary documents and furnished full information but the proper officer deems it necessary to make further enquiry; or
(d) where necessary documents have not been produced or information has not been furnished and the proper officer deems it necessary to make further enquiry,
the proper officer may direct that the duty leviable on such goods be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed as the case may be, and the duty provisionally assessed.]
2 [(1A) Where, pursuant to the provisional assessment under subsection (1), if any document or information is required by the proper officer for final assessment, the importer or exporter, as the case may be, shall submit such document or information within such time, and the proper officer shall finalise the provisional assessment within such time and in such manner, as may be prescribed.]
(2) When the duty leviable on such goods is assessed finally 3 [or reassessed by the proper officer] in accordance with the provisions of this Act, then–
(a) ………..,
(b) ………,
6 [(3) The importer or exporter shall be liable to pay interest, ……..
(4) Subject the sub-section (5), if any refundable amount referred to in clause (a) of sub-section (2) is not refunded under that subsection within three months from the date of assessment, of duty finally or re-assessment of duty, as the case may be, there shall be paid an interest on such un-refunded amount at such rate fixed by the Central Government under section 27A till the date of refund of such amount.]
7. Further, I find that the decisions relied upon by the Ld. Counsel for the appellant are not applicable to the present case because they were not decided under the provisions of Section 18 read with Section 27(A) of the Customs Act, 1962.
8. Further, I find that the decisions relied upon by the Ld. DR are applicable in the present case.
In this regard, I may refer to the decision of CCE vs. IOCL 2012 (282) E.L.T368 (Del) wherein it has been held by the Hon’ble Delhi High Court that in the case of provisional and final assessment, the refund is payable in terms of Section 18 of the Customs Act, 1962. The relevant portion of Para 20 of the judgement is reproduced herein below:-
“20.. In the first situation the assessee has paid provisional duty which gets reduced on final assessment. The assessee, therefore, becomes entitled to refund which is payable in terms of Rule 9B of the Excise Act [(sic) Rules], 1944 or Section 18 of the Act.”
9. Further, I find that the appellant is entitled to interest if the refund is payable after the expiry of 3 months from the date of final assessment as per Section 18 (4) of the Customs Act whereas in the present case the refund was granted within 3 months as prescribed under Section 18 (4) of the Act. Therefore, in my considered view, the appellant is not entitled to any interest in view of the statutory provisions and the case laws cited (supra)
10. In view of above, I do not find any infirmity in the impugned order which is upheld by dismissing the appeal of the appellant.
(Pronounced on 13.09.2023)
