Electronic Data Interchange (EDI) System Glitches: CESTAT remands Refund Claim on CVD Paid for Fresh Adjudication [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has remanded the refund claims of two Imp-Ex Companies for fresh adjudication, directing the original authority to reconsider the matter in accordance with law and principles of natural justice.

The assessee had imported PVC-coated cloth during 2010-2015 and paid Countervailing Duty (CVD) despite exemption under Notification No. 30/2004-CE, as the Electronic Data Interchange (EDI) system failed to reflect the notification details. Similar importers had earlier secured refund of CVD through favorable orders, ultimately upheld by the Supreme Court in Commissioner v. Enterprise International Ltd. [2017 (346) ELT A130 (SC)].

Following the apex court ruling, the respondents filed refund claims for CVD paid at import. The claims were rejected by the Assistant Commissioner (Refunds) on the ground that the Bills of Entry were finally assessed and no appeal had been filed against the assessments. The Commissioner (Appeals) subsequently set aside the rejection and remanded the matter to the adjudicating authority. Aggrieved by this, the Revenue appealed before the Tribunal.

The Revenue contended that refund applications were not maintainable unless the assessments were modified or set aside under Section 128 of the Customs Act, 1962, citing ITC Ltd. v. CCE, Kolkata-IV [2019]. The Authorized Representative, Shri Anoop Singh, argued that refund and assessment are distinct proceedings, and the Assistant Commissioner (Refund) cannot revisit final assessments.

On the other hand, Shri N. Viswanathan, Counsel for the respondents, argued that the rejection order was passed ex parte without notice, violating the principles of natural justice, and that the EDI error led to duty collection without authority of law, contrary to Article 265 of the Constitution. He further contended that similar importers had been granted refunds, and denial in their case amounted to discrimination under Article 14.

The Tribunal Bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) while passing the order, noted that although the Revenue’s contention on the finality of assessments carried weight, the refund claims needed to be evaluated within the framework of the Customs Act and established judicial precedents, including Mafatlal Industries Ltd. v. Union of India [1997]. The Bench observed that equality cannot be claimed in illegality but acknowledged procedural lapses, including the non-communication of the Tribunal’s earlier recall order to the parties.

Considering these factors, the Tribunal upheld the Commissioner (Appeals)’ decision to remand the matter but modified it, directing the Original Authority to conduct de novo adjudication within 90 days after granting a fair opportunity of hearing. The authority was instructed not to be influenced by prior findings while issuing a speaking order. The appeals and cross-objections were disposed of on these terms.

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