Case Law Details
Associate Lumber Pvt. Ltd. Vs Commissioner of Customs (Import) (CESTAT Chennai)
CESTAT Chennai has emphasized that recovery cannot be made effective from the assessee before completion of the appeal period mentioned in section 129 A (3) of the Customs Act, 1962. Legislature has prescribed three months time from the communication of the order.
In the case above mentioned, lower authority allowed refund of Rs. 23,30,109/-. However, after review based on certain observation department issued recovery proceedings of amount Rs. 3,31,091/- as goods cleared at Tuticorin port does not pertain to the jurisdiction of Chennai Port. Appeal filed by the assessee was decided without providing an opportunity of being heard and on the basis of order passed by Commissioner (Appeal) department issued demand notice.
On further appeal to tribunal, it was seen that demand notice was issued without waiting for appeal period or without deciding any stay application. Further, it was seen that intimation letter sent by the office of first appellate Authority was returned with remark “left and moved”. It was argued by the counsel for the assessee that impugned order has been issued in violation of principal of natural justice and without discussing on merits.
Finally tribunal held that, coercive action before completion of the appeal period and the crystallisation of the substantive rights and liabilities of either of the parties has adversely affected the appellants chances from getting relief from a higher Appellate forum. Further, the impugned order did not decide of the rights and liabilities of parties by the application of mind to the merits of the matter. Substantive justice should not be denied on technical grounds without making visible efforts to reach out to the appellant. The impugned order hence merits to be set aside.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed against Order in Appeal C. Cus. II No. 62/2014 dated 3 1.10.2014 passed by the Commissioner of Customs (Appeals – II), Chennai (impugned order).
2. Brief facts of the case are that the appellant had imported ‘Roughly Square Teak Logs, Teak Logs, Teak Round Logs etc.’ vide 34 Bills of Entry and filed refund claim for Rs.23,30,109/-. The lower authority vide Order in Original dated 18.5.2012, after verifying the records allowed refund of the entire amount of Rs.23,30,109/-. On review of the Order in Original dated 18.5.2012, based on certain observations, department issued Show Cause cum Demand Notice dated 6.9.2012 for recovery of an amount of Rs.3,31,091/- as the goods pertaining to Bill of Entry No. 2869391 dated 2.3.2011 were cleared at Tuticorin Port and does not pertain to the jurisdiction of Chennai Customs. Therefore, the sanction of refund towards the said Bill of Entry was sought to be recovered. In the meanwhile, aggrieved by the sanction of refund, the department filed an appeal before Commissioner (Appeals) and vide the impugned order, the Commissioner (Appeals) had directed recovery of the refund amount of Rs.3,31,091/- as the refund has been granted without jurisdiction. The department vide Demand Notice dated 14.1.2015 confirmed the demand for recovery of erroneous refund amount of Rs.3,31,091/-. The appellant in the present appeal is challenging the Order in Appeal dated 31.10.2014.
3. Shri Shashank Nair, learned Advocate appeared for the appellant and Shri N. Satyanarayanan, learned Authorized Representative appeared for the respondent-department.
3.1 The Ld. Advocate for the appellant has stated that the issue involved is the rejection of their refund claim on technical grounds. The impugned order has been issued in violation of the principles of natural justice and without discussing the issue on merits and hence may be set aside, with consequential relief.
3.2 The Ld. AR representing revenue stated that an opportunity for hearing was granted by the First Appellate Authority, but the intimation letter was returned with the remarks ‘left and moved’, as recorded in the order. Hence no purpose would be served by sending another notice when the appellant has not shown due care to intimate the Commissioner Appeals Office of the new address. He hence prayed that the appeal may be rejected.
4. Heard the Ld. Counsel for the appellant and the Ld. AR for revenue representing the contesting parties. I have also carefully perused the Appeal Papers, and the judgments cited. Prima facie on going through the case records, I find that the impugned Order in Appeal dated 31/10/2014 has allowed the department’s appeal and directed that action may be initiated to recover the erroneously sanctioned refund. The impugned directions have been acted upon by the Lower Authority and a Demand Notice dated 14/01/2015 has been issued for recovery of an amount of Rs.3,31,091/- erroneously granted, as recorded at para 6 of the said Notice, even prior to three months from the issue of the impugned order.
5. I find that as per Section 129A (3) of the Customs Act, 1962, an appeal can be filed before CESTAT within three months of the communication of the order, whether it is filed by the party or by the Thus, coercive action before completion of the appeal period and the crystallisation of the substantive rights and liabilities of either of the parties has adversely affected the appellants chances from getting relief from a higher Appellate forum. Board vide Circular No.788/21/2004-CX, dated 25th May, 2004 had clarified and directed that field officers should refrain from taking coercive action till the period of filing a stay petition before the CESTAT, or till the disposal of the stay petition, whichever is earlier. The above circular was rescinded by Circular No. 967/1/2013-CX, dated 1st January, 2013, reducing the period for initiating recovery proceedings, by field officers, to after the completion of 30 days from the date of the order or the disposal of the stay application which ever was earlier. The Hon’ble Bombay High Court in the case of Patel Engineering Limited Vs Union of India (2013-TIOL-150-HC-MUM-ST) held that recovery proceedings cannot be initiated when the stay application has remained pending for reasons beyond the control of the assessee. In the revised scheme of appeals based on a mandatory pre-deposit, a stay on the order appealed is deemed operative once the appeal is accepted on the file of the Tribunal after paying the requisite pre-deposit.
6. Moreover, I find that the impugned order is very cryptic without there being a adjudication of the rights and liabilities of parties by the application of mind to the merits of the matter. While the First Appellate Authority, could have decided the matter ex-parte for non-prosecution, however it should not have been done at the first instance when the intimation letter was returned with the remarks ‘left and moved’. The appellant should not have been denied the opportunity for a personal hearing as required by the principles of natural justice without making a serious attempt to reach out to him, through his representative or through the department, lest the appellant be aggrieved with closure of the appeal, for unintended lapses. This is not to condone the laxity on the part of the appellant in not updating his new contact address, which is not appreciated. However substantive justice should not be denied on technical grounds without making visible efforts to reach out to the appellant. The impugned order hence merits to be set aside.
7. Moreover the ‘Demand Notice’ which flows from the impugned order comes into jeopardy and cannot be implemented as being infructuous once the appellate order on which it is based is set aside.
8. I accordingly set aside the impugned order and remand the matter to the file of the First Appellate Authority to be decided afresh after giving the appellant an opportunity of being heard, as per law. The parties are at liberty to advance arguments on the merits of the case before the said Authority. All contentions are left open. The appellant should cooperate in the matter and appear for the hearing on the date fixed. He should also indicate the correct address for service of notice to the said authority, within fifteen days of receipt of this order. The appeal is allowed and disposed of on the aforesaid terms.
(Order pronounced in open court on 04.11.2024)
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