Customs Act, 1962 – ss. 17 and 27 (both prior to and postamendment by the Finance Act, 2011) – Assessment of duty – Claim for refund of duty – Absence of any challenge to the order of assessment in appeal – Maintainability of refund application against the assessed duty – On facts, appellant-paper manufacturer, paying duty on the paper cleared from its factory – By a Notification, the appellant availed complete exemption from duty – Upon receipt of letter from the department, appellant realized its mistake in availing exemption under the Notification and started paying duty on waste paper/broke – Thereafter, appellant filed refund claim for the period from July 2001 to March 2002 for an amount in respect of duty paid on the said waste paper – Rejection of the claim by Assessment Committee, Commissioner of Appeals and Tribunal – Appeal thereagainst allowed – On appeal, held: Claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings – It would not be within the ken of s.27 to set aside the order of self-assessment and reassess the duty for making refund – Provisions u/s.27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made – Order of self-assessment is required to be followed unless modified before the claim for refund is entertained u/s.27 – In case any person is aggrieved by any order which would include self-assessment, he has to get the order modified u/s.128 or under other relevant provisions of the Act – Thus, the order passed by the tribunal is upheld and that by the High Courts are set aside and applications for refund are not maintainable.
Disposing of the appeals, the Court
HELD: 1.1 It is apparent from the amended definition of Section 2(2) of the Customs Act, amended by Finance Act, 2011, that self-assessment, provisional assessment, re-assessment and any assessment in which the duty assessed is nil, is an assessment. Assessment includes self–assessment, when the provision of self-assessment has been incorporated in Section 17(1), and corresponding change has been made in the definition of assessment in Section 2(2). Earlier the word self–assessment was not included in the definition of assessment. [Para 23] [372-G]
1.2 Coming to the procedure of assessment of duty as prevailed before the amendment of the Act prior to the amendment made in section 17(1) by the Finance Act of 2011, the imported goods or exported goods were required to be examined and tested by the proper officer. After such examination, he had to make an assessment of the duty, if any, leviable on these goods. Under sub-section (3) of section 17, the proper officer was authorized to require the importer, exporter or any other person to produce any contract, broker’s note or any other document as specified in the proviso and to furnish any required information. Notwithstanding that the statements made in the bill of entry relating thereto and the documents produced and the information furnished under sub-section (3); but if it was found subsequently on examination or testing of the goods or otherwise that any statement in such bill of entry or document or any information so furnished was not true, he could have proceeded to reassess the duty. Where the assessment done under subsection (2) is contrary to the claim of the importer or exporter regarding valuation of the goods, classification, exemption or concession, speaking order shall be passed within 15 days from the date of assessment of the bill of entry or the shipping bill as the case may be as provided in section 17(5). [Para 32] [382-C-F]
1.3 Under the provisions of section 17 as amended by Finance Act of 2011, section 17(1) has provided to self–assess the duty if any leviable on such goods by importer or exporter as the case may be. Self–assessment is an assessment as per the amended definition of section 2(2). It is further provided that proper officer may verify the self–assessment of such goods, and for this purpose, examine or test any imported goods or exported goods or such part thereof as may be necessary. The power to verify self–assessment lies with the proper officer and for that purpose under section 17(3), he may require the importer, exporter or any other person to produce such document and furnish such information, etc. If the proper officer on verification has found on examination or testing of the goods or as part thereof or otherwise that the self–assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under the Act, may proceed to re–assess the duty leviable on such goods. Section 17(5) of the Act as amended provides that where re–assessment done under sub-section 17(4) is contrary to the assessment done by the importer or exporter regarding the matters specified therein, the proper officer has to pass a speaking order on the re–assessment, within 15 days from the date of reassessment of the bill of entry or the shipping bill, as the case may be. The explanation to amended section 17 has clarified that import or export before the amendment by Finance Act, 2011 shall be governed by unamended provisions of section
17. [Para 33] [382-G-H; 383-A-C]
1.4 Section 18 deals with the provisional assessment of duty where the importer or exporter is unable to make self–assessment or the proper officer deem it necessary to subject any imported or export goods to any chemical or other tests; or where further inquiry is deemed necessary by the proper officer. [Para 34] [382-D]
1.5 Section 27 of the Act prior to amendment by Finance Act, 2011 provided for refund procedure. Any person could claim a refund of duty and interest if any paid on such duty. Refund of duty and interest if any paid pursuant to the order of assessment or borne by him, may make an application for refund of such duty to the Assistant Commissioner of Customs or Deputy Commissioner of Customs within one year in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital. In any other case before the expiry of six months from the date of payment of duty and interest. He has to further satisfy that he has not passed on such liability to any other person. The limitation of one year or six months shall not apply where any duty and interest has been paid under protest. It is made clear by the second proviso to section 27 that in case of refund becomes necessary as a consequence of judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year or six months shall commence from the date of such judgment, decree, order or direction. [Para 35] [383-E-H]
1.6 Section 27 of the Customs Act as amended by Finance Act, 2011 provides that any person claiming refund of any duty or interest paid or borne by him, may make an application in such form and manner as may be prescribed for such refund to the Assistant or Deputy Commissioner of Customs before the expiry of one year from the date of payment of such duty or interest. If an application for refund has been made before Finance Bill received the assent of the President, it is deemed to be filed under the provision of section 27 (1) as existed and to be dealt with under section 27(2). The period of limitation of one year provided by the provisions of section 27 has to be computed in the case of goods which are exempt from payment of duty by a special order issued under section 25(2) from the date of issue of such an order as provided in section 27(1B)(a). 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. It is provided in Section 27(1B)(c) that 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 the case of re–assessment, from the date of such re–assessment. The second proviso to section 27 makes it clear that limitation of 1 year shall not apply where any duty or interest has been paid under protest. [Para 36] [384-A-D]
1.7 Under Section 27(2)(a) it is incumbent upon the applicant to satisfy that the amount of duty or interest of which refund has been claimed, had not been passed by him to any other person, the provision aims at preventing unjust enrichment. No doubt about it that the expression which was earlier used in Section 27(1)(i) that “in pursuance of an order of assessment” has been deleted from the amended provision of Section 27 due to introduction of provision as to self–assessment. However, as self–assessment is nonetheless an order of assessment, no difference is made by deletion of aforesaid expression as no separate reasoned assessment order is required to be passed in the case of self–assessment. It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise. [Para 37, 38, 41] [384-E-G; 386-H]
1.8 As the order of self–assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression ‘Any person’ is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of re–assessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self–assessment. The order of self–assessment is an order of assessment as per section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self– assessment is not found to be satisfactory, an order of re– assessment has to be passed under section 17(4). Section 128 has not provided for an appeal against a speaking order but against “any order” which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law. [Para 43] [387-F-H; 388-A-B]
1.9 The provisions under section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self–assessment has been made. In other words, the order of self–assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or re–assessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, re-assessment is not permitted nor conditions of exemption can be adjudicated. Re–assessment is permitted only under Section 17(3)(4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will virtually amount to an order of assessment or re–assessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the refund provisions under Section 27. [Para 44] [388-C-F]
1.10 The reasoning employed by the High Courts of Delhi and Madras does not appear to be sound. The scope of the provisions of refund under Section 27 cannot be enlarged. It has to be read with the provisions of Sections 17, 18, 28 and 128. [Para 46] [389-A]
1.11 On consideration of overall effect of the provisions prior to amendment and post–amendment under Finance Act, 2011, it is opined that the claim for refund cannot be entertained unless the order of assessment or self–assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self–assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self–assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. The order(s) passed by Customs, Excise, and Service Tax Appellate Tribunal is upheld and that passed by the High Courts of Delhi and Madras to the contrary, are set aside. The applications for refund were not maintainable. [Para 47, 48] [389-B-E]
Escorts Ltd. v. Union of India & Ors. (1994) Supp. 3 SCC 86 ; Priya Blue Industries v. Commissioner of Customs 2004 (172) E.L.T. 145 (SC) ; [2004] 4 Suppl. SCR 501 – relied on.
Union of India & Ors. v. Micromax Informatics Ltd. 2016 (335) ELT 446 (Del) ; Aman Medical Products Limited v. Commissioner of Customs, Delhi 2010 (250) ELT 30 (Del) ; M/s. SRF v. Commissioner of Customs, Chennai 2015 (318) ELT 607 (SC) ; Commissioner of Wealth Tax, Gujarat III Ahmedabad v. Ellis Bridge Gymkhana (1998) 1 SCC 384 : [1997] 4 Suppl. SCR
626 ; Maharashtra State Financial Corporation v. Jaycee Drugs and Pharmaceuticals (P.) Ltd. (1991) 1 SCC 637 ; O.P. Singla & Anr. v. Union of India & Ors. (1984) 4 SCC 450 ; [1985] 1 SCR 351 ; Union of India v. Popular Construction Co. (2001) 8 SCC 470 : [2001]
3 Suppl. SCR 619 ; Commissioner of Customs v. Sayed Ali (265) ELT 17 (SC) ; Collector of Central Excise, Kanpur v. Flock (India) Pvt. Ltd. 2000 (120) ELT 285 (SC) : (2000) 6 SCC 650 : [2000] 2 Suppl. SCR 156 ; Hero Cycles Ltd. v. Union of India 2009 (240) ELT 490 (Bom.) ; Central Office Mewar Palace
Org. v. Union of India 2008 (12) STR 545 (Raj.) – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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