Application for Refund of Customs Duty on Import Invalid without Modification of Self-assessment & Duty Re-determination: CESTAT [Read Order]

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that the application for refund of Customs Duty paid on import shall be invalid without modification of self-assessment and duty re-determination.

The assessee M/s. Tamil Nadu Generation & Distribution Corporation Limited had filed seven refund claims for Customs Duty paid on the import of ‘non-coking coal in bulk’ based on the argument that the assessable value should be re-assessed by adding Rs.33/- per metric ton (M.T.) as a trade margin to the Cost, Insurance, and Freight (CIF) value, instead of adding 2% of the CIF value as high sea sales load.

Seven Show Cause Notices (SCNs) were issued to the assessee proposing to reject the refund claims.

The adjudicating authority rejected the refund claims on the grounds that the claims were not in order and that the assessee did not provide sufficient evidence to prove that their claim was not hit by unjust enrichment.

The assessee filed an appeal before the first appellate authority, who allowed the appeal and set aside the rejection order considering the relevant purchase orders, Board circulars, and provisions of the Customs Valuation Rules and directed the assessee to produce relevant documents to prove that the incidence of duty was not passed on to the buyers.

Aggrieved by the decision of the first appellate authority, the Revenue, Commissioner of Customs filed appeal before the CESTAT, challenging the eligibility of the assessee for the refund.

The appellant-revenue was represented by Shri S. Balakumar, the Assistant Commissioner and the respondent-assessee was represented by Shri R.R. Padmanabhan.

The revenue stated that the finding of first appellate authority on Rule 10(3) and Rule 10(4) is not applicable for an order under Section 17 of the Customs Act, 1962.

The revenue contended that the assessee should have filed appeal against the order passed under Section 17 of the Customs Act and should have brought to the notice of the adjudicating authority the provision of Rule 10(3) and Rule 10(4) and the Board Circular No. 32/2004-Cus.

The revenue argued that the addition of 2% to the assessable value is not in terms with the Board Circular No. 32/2004 but a voluntary act of the assessee who added 2% notional value.

The department also highlighted that the importer-assessee did not pay the duty under protest nor were the Bills-of-Entry assessed provisionally and since there was no contest from the assessee in the particular assessment, the same is not an adverse order and consequently, the refund claims are contrary to an order which had attained finality.

The respondent-assessee supported the findings of the first appellate authority.

The bench identified the main issue for consideration is whether the first appellate authority was correct in holding that the assessee was eligible for the refund.

The bench, after examining the orders of the first appellate authority and the adjudicating authority, along with the documents submitted by the assessee, noted that there was a discrepancy in the quantity of the imported cargo and observed that the importer had not provided sufficient evidence to support their claim of a trade margin of Rs.33/- per M.T.

The tribunal also emphasized that the satisfaction of the assessing officer in such claims is crucial.

Referring to the relevant provisions of the Customs Act, 1962, Board circulars, and Supreme Court judgment in the case of M/s. ITC Ltd., the CESTAT bench held that the right to appeal is available to both the assessee and the Department, even against self-assessment.

It was also clarified that until and unless the self-assessment is modified and the duty is re-determined, no application for refund can be made. The bench cited the Supreme Court's decisions in the case of Flock (India) Pvt. Ltd. and Priya Blue Industries insupport of its findings.

The two-member bench consisting of Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member)found that the first appellate authority erred in holding that the assessee was eligible for the refund.

In conclusion, the order of the first appellate authority was set aside and the rejection of the refund claims by the adjudicating authority was upheld.

To Read the full text of the Order CLICK HERE

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