CESTAT denies Rs. 8.36 Cr Excess CVD Refund Claim w/o Reassessment beyond 1 Year Limitation under Customs Act [Read Order]

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, has held that no refund of excess CVD (Countervailing Duty) can be claimed without reassessment and beyond the one-year limitation period, dismissing Rs. 8.36 crore claim.

M/s Drive India Enterprise Solutions Limited (the appellant) imported mobile phones at the Air Cargo Complex, Sanganer, Jaipur, under 77 Bills of Entry during the period from January 30, 2014, to November 20, 2014, and paid CVD at the rate of 6%.

Following the judgment of the Hon’ble Supreme Court in M/s SRF Ltd. vs. Commissioner of Customs [2015], the appellant filed a refund application on November 25, 2019, under Section 27(1)(a) and (b) of the Customs Act, 1962, seeking reimbursement of excess duty amounting to Rs. 8,36,11,598/-. Along with the refund claim, the appellant requested reassessment of the relevant Bills of Entry to enable adjustment of the excess CVD.

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The departmental authorities rejected the refund application, holding that a self-assessment under Section 2(2) of the Customs Act is a valid assessment unless modified by a reassessment under Section 17(4). The authorities further noted that Section 27 does not permit a refund of duty unless the assessment is challenged or amended.

Reliance was placed on CBEC Circular No. 24/2004-Cus. dated March 18, 2004, which clarified that refund claims cannot be entertained directly on self-assessed Bills of Entry that have attained finality.

The original adjudicating authority, through Order No. 32/2019-20, cited two main grounds for rejection: absence of any challenge to the original assessment and non-maintainability of the claim due to limitation. The appellate authority, through Order-in-Appeal No. 06/2022 dated January 28, 2022, upheld the rejection.

The appellant contended that the refund claim was filed under protest, as per Notification No. 12/2012-C.E., Entry 263A, which prescribed a CVD rate of 1% for mobile handsets, whereas the duty was erroneously paid at 6%. The appellant also submitted that the refund claim did not constitute unjust enrichment, providing a Chartered Accountant certificate stating that the excess CVD was not passed on to buyers.

Further, the appellant argued that reassessment of Bills of Entry was not mandatory for claiming a refund under Section 27, and cited various orders from other jurisdictions allowing similar reassessment requests.

The Department refuted these contentions, emphasising that the refund claim was filed nearly five years after the payment of duty and far beyond the one year prescribed under Section 27. No documentary evidence was provided to substantiate that the duty was paid under protest. It was also highlighted that the appellant did not challenge the rejection of their request for reassessment.

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Citing the Apex Court decision in ITC Ltd. vs. Commissioner of Central Excise [2019], the Tribunal noted that refund claims cannot be processed without an amendment or reassessment of the underlying self-assessed Bills of Entry. Further, the Commissioner (Appeals) rightly considered the issue of unjust enrichment, as the burden of proof lies with the claimant to show that the duty was not passed on to buyers.

The Tribunal observed that the refund claim under Section 27 must comply with the statutory limitation of one year unless the duty is demonstrably paid under protest. In the present case, no credible evidence was provided to establish such a protest at the time of payment.

Additionally, the Supreme Court has consistently held that a claim based on the decision in another taxpayer’s case cannot reopen a finalised assessment. The Tribunal also noted that the Chartered Accountant’s certificate did not sufficiently establish that the incidence of duty was not passed on to the buyers, as required under Section 28D of the Customs Act.

Considering the above, the two-member bench comprising Dr Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) held that the refund application was barred both on the ground of limitation and for failure to seek reassessment of the self-assessed Bills of Entry. Consequently, the Tribunal dismissed the appeal, upholding the departmental authorities’ orders and rejecting the refund claim of Rs. 8.36 crore.

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