Itc Limited v. Commissioner of Central Excise, Kolkata Iv
ARUN MISHRA, J.
1. These appeals have been preferred by the assessees as w ell
as by the Union of India aggrieved by the judgment and order passed by
the High Courts and Customs, Excise and Service Tax Appellate Tribunal,
Kolkata (for short referred to as “the Tribunal”).
2. The question involved in these appeals is whether in the absence
of any challenge to the order of assessment in appea l, any refund
application against the assessed duty can be entertained?
3. The tribunal has in the case of ITC Limited opined that unless
the order of assessment is appealed, no refund application agai nst the
assessed duty can be entertained. On the other hand, in the ca ses in
which Union of India or the Department has come up in appeal, t he
High Court of Delhi framed question of law as “whether non filing of
appeal against the assessed Bill of Entry in which there was no lis between
the importer and the Revenue at the time of payment of duty will deprive
the importer of his right to file refund claim under Secti on 27 of the
Customs Act, 1962 (for short, “the 1962 Act”)”?
4. While interpreting provisions contained in Section 27 of the
Act, the High Court has opined that when there is no assessment order
for being challenged in appeal, which is passed under Section 27(1)(i) of
the Act, because there is no contest or lis and hence no adversarial
assessment order, the cases would be covered by the provision of Section
27(i) (ii) and refund applications can be maintained by the assessee even
in the absence of filing appeals against the assessed bi ll of entry. The
High Court of Madras has opined similarly.
5. In the case of Union of India & Ors. vs. Micromax
Informatics Ltd., reported in (2016) 335 ELT 446 (Del) the High Court
of Delhi has opined that an important change has been made in Section
27 of the Customs Act in that a person can now claim refund of any duty
or interest as long as such duty or interest was paid or borne by such
person. The conditionality of such payment having been made pursuant
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV
to an order of assessment does not exist. It has also been observed that
once an application is made under Section 27(1) of the Act, it is incumbent
on the authority concerned to make an order under Sec tion 27(2)
determining if any duty or interest as claimed is refundable to the applicant.
It has been opined that under Section 27 of the Act as amended, it is not
open to an authority to refuse to consider the application for refund only
because no appeal has been filed against the assessment order, if there
is one.
6. The High court has further opined that although under Section
27(2) of the Act, the word ‘assessment’ includes a self-assessment, the
clearance of the goods upon filing of the bills of entry and payment of
duty is not per se an assessment order in the context of Section 27(1) (i)
as it stood prior to 8.4.2011, particularly, if such duty has not been paid
under protest. In any event, after 8.4.2011, as long as customs duty or
interest has been borne by a person, a claim for refund ma de by such
person under Section 27(1) of the Act will have to be entertained and an
order passed thereon by the authority concerned, even where an ord er
of assessment may not have been reviewed or modified i n appeal.
Reliance has been placed on the case of Aman Medical Products
Limited v. Commissioner of Customs, Delhi, 2010 (250) ELT 30 (Del).
7. The facts of the case of ITC Limited are that the appella nts
manufacture paper from both conventional and unconventional raw
materials. In the course of the manufacturing activity, w aste paper/
broke arises which are recycled in the manufacturing process by making
pulp. Sometimes, after entry in the RG 1 register, the paper is found to
be defective and incapable of being sold and as such is requir ed to be
reprocessed and if that is not possible, then it is rejected and has to be
re-pulped and recycled.
8. The appellant had been paying duty on paper cleared from its
factory. The rate of duty of paper manufactured from conventional and
unconventional raw material differed. The appellants availed exemption
under Notification No.67/95-CE dated March 16, 1995 as to the duty in
respect of waste paper/ fresh broke. By Notification No.6/ 2000-CE
dated March 1, 2000 complete exemption was granted in respect o f
paper up to the specified quantitative limit manufa ctured from
unconventional raw materials. Upon receipt of a letter dated March 30,
2001 from the Superintendent of Central Excise, the Appellant examined
the matter and realized the mistake committed by it in a vailing the
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exemption under Notification No.67.95-CE in respect of waste pape r/
broke utilized in the manufacture of paper cleared at ‘nil’ r ate of duty
under Notification No.6/2000-CE. From May 2001 onwards, the appellant
stopped availing the exemption and started payment of duty on wast e
paper/broke.
9. The relevant period involved in the appeal i.e. July 2001 to
March 2002. The Appellant’s assessments for this period were provisional
and these entries were finalized on 30.01.2003. Th e provisional
assessment order was passed on 1.3.2002. The appellant has clai med
that at the time of the said final assessment order dated 30.01 .2003, it
was not aware of the notification No.10/96-CE or the said circular dated
1.3.2001 and as such, no claim thereunder was made by it till that time
nor was any such claim so considered or decided in the said final
assessment order.
10. On July 18, 2003, the appellant filed a refund claim for an
amount of Rs.28,73,120/- in respect of the duty paid on the said waste
paper/ broke during the period from July 2001 to March 2002. The said
refund claim was filed under section 11(b) of the Central Exc ise Act,
1944 (for short, referred to as “the 1944 Act”) and within the statutory
period of limitation.
11. A show cause notice was issued as to why the said claim be
not rejected to which a reply was filed. The assessment com mittee
rejected the said claim. The Commissioner of Appeals dismis sed the
appeal. Thereafter, successive appeal was preferred before the Tribunal.
The Tribunal has rejected the refund claim of the appellant. Hence, the
appeal has been preferred under section 35(b) of the 1944 Act.
12. In the case of Union of India & Ors. v. Micromax Informatics
Ltd. , the respondents (i.e. Micromax Informatics Ltd.) had imported
mobile handsets including cellular phones during the period 30.07.2014
to 29.8.2014. At the time of customs clearance, they paid Additi onal
Customs Duty (CVD) under Section 3(1) of the Customs Tariff A ct,
1975 at the rate of 6 %. In all, the imports bills of entry were self-
assessed by the respondents in terms of the Self-Assessment Scheme
under section 17 of the Act and were thus finally assessed. This Court in
M/s. SRF v. Commissioner of Customs, Chennai 2015 [318] ELT 607
(SC) held that for quantification of CVD in case of an ar ticle that has
been imported, it has to be presumed that the said imported article has
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
been manufactured in India and then the amount of excise duty leviable
thereon has to be ascertained for determining the extent of e xemption
from payment of CVD to which the importer would be entitled. The
respondent had filed the refund claim of Rs.35.89 crores for duty totally
paid under the self-assessed bills of entry, under section 27 of the 1962
Act in the Air Cargo Export Commissionerate, claiming a refund of the
Additional Customs Duty (CVD) in view of Serial Number 263 A and
Condition No.16 of notification No.12/2002-Ex. Dated 17.03.2012 and
for the said Condition No.16, mobile handsets were chargeable to a duty
of 1% if no CENVAT credit had been availed by the importer. T he
Micromax claimed that they had made excess payment while complying
with the condition No.16 of the aforesaid notification. They claimed the
refund of deferential duty of 5%. The Assistant Commissioner (Refunds)
rejected all the claims as not maintainable in the absence of evidence of
excess payment of duty. He further held that the Bills of Entry had
already been assessed and there were assessment orders which could
only be reviewed or modified in appeal. It was also observe d that the
respondent failed to submit any reassessment order or speak ing order
under section 17(5) of the 1962 Act and that it was beyond the jurisdiction
of the Refund Branch to decide the issue on merits. The officer
considering a refund claim cannot sit in appeal over an assessment made
by a competent officer. The High Court held that self-assessment is not
an assessment order per se and allowed the writ petition. Hence the
appeal by the Union of India.
13. In Commissioner of Customs, New Delhi v. Aman Medical
Products Ltd. , the respondents had imported cannula for the purpose of
manufacture of injection needles. At the time of filing of bills of entry,
the respondent could not indicate the benefits available under notification
No.6/2002 Cus, dated 1.3.2002 which provided a concessional rate of
duty on the imported goods. The bills of entry were assesse d finally.
Subsequently, the respondent filed an application for refund. The refund
claim was rejected by the Deputy Commissioner. The r espondent
preferred an appeal before the Commissioner (Appeals) for g rant of
refund of excess duty paid by them. The appeal was allowed by the
Commissioner of Appeals. The Department filed an appeal before the
Tribunal. The Tribunal observed that refund claim cannot be adjudicated
on merits. The respondent – Aman Medical Products Ltd filed a writ
petition before the High Court. The writ petition has been allowed.
369
14. Shri P. Chidambaram, learned senior counsel has taken us
through the definition of the ‘assessment’ as prevailed under the 1962
Act and the amended definition under the Act, assessment w.e.f. 8.4.2011,
Finance Act, 2011, Section 17 and Section 27 as amended by the Finance
Act, 2011. It was urged by learned senior counsel that prior to t he
amendment by the Finance Act, 2011, the scheme of assessment under
section 17 of the Customs Act was such that once a bill of entr y was
filed, examination and testing of the imported goods were done by the
proper officer. Thereafter, an order of assessment was passed after the
physical examination. Accordingly, section 27 of the Custom s Act
provided that claim for refund to be made by any person who ha d (a)
paid duty in pursuance of an order of assessment or (b) a pers on who
had borne the duty. Earlier, there was a necessity for an order of
assessment by a proper officer under section 17 of the Cust oms Act.
After the amendment to the Act in 2011, there is no need to get t he
assessment of bill of exchange done for claiming a refund of e xcess
duty paid under Section 27 of the Act, as now the bill of entry is to be
self-assessed by the importer or exporter and will be subject to verification.
Further, under section 17(4) of the Customs Act if it is found that self-
assessment of duty has not been done correctly by an importer or exporter
the proper officer, may re-assess the duty. In case of re-a ssessment
within fifteen days from the date of re-assessment under section 17(5),
a speaking order has to be passed by the proper officer. In the c ase of
re-assessment done under section 17(4), it is only in these circumstances
an order is passed. If no order of assessment is passed in t he case of
self-assessment, the refund application can lie. It was urged that section
27 has also been amended by way of amendment by the Finance Ac t,
2011. An application for refund of duty and the requirement of order of
assessment that was requisite before the amendment h as now been
expressly removed. It would be a retrograde step to interpret the amended
provision otherwise and to deny the refund claim which is not adjudicatory
when the bill of entry has been passed. In the case of self-assessment,
the duty paid under a mistake can always be claimed without filin g an
appeal and in that event concerned officer has to look into the matter
whether the claim for refund was justified.
15. Reliance has been placed on behalf of the assessee on SRF
Limited vs. Commissioner of Customs (supra). It is not necessary to
pass an order of reassessment or speaking order under the amended
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
provisions of section 17. The decision in Priya Blue Industries v.
Commissioner of Customs 2004 (172) E.L.T. 145 (SC) is based upon
the unamended provisions, thus, cannot hold the field and is inapplicable
in view of the amendment made in the provisions. Under section 17(1)
of the amended provisions, bills of entry have to be self-asse ssed by
importer or exporter. The verification of the self-assessme nt has now
been made optional. The self-assessment is not to be disturbed unles s
there is a verification required by the proper officer and for this purpose,
he may examine or test goods or part thereof.
16. It was further urged on behalf of the assessee that amend ed
section 17 and section 27 are to be read together. By amended section
27 it is now provided that an application for refund of duty will be made
by any person who has paid the duty or by any person who has borne
the duty. Earlier refund could be claimed by the person wh o has paid
the duty. Under the post amendment provision the words “in pursuance
to the order of assessment” have been deleted and a refund clai m is
maintainable by the assessee in case duty has been “paid by him”. The
legislative intent is clear. Now the order of assessment has been made
irrelevant and a re-assessment to an order is no longer a p re-requisite
for maintaining a refund claim. Now under the schem e of self-
assessment, there would be no order of assessment by the proper officer.
17. It was further urged on behalf of the assessee that section 27
cannot be rendered otiose or redundant. Section 27 does not contain
any stipulation which may suggest that refunds can be filed onl y after
the Bill of Entry has been appealed against. In the absence of suc h a
statutory condition, a restriction on refund claim cannot be imported into
the statute. Taxing statute has to be strictly interpreted and there is no
room to infer any intendment thereof as held by thi s Court in
Commissioner of Wealth Tax, Gujarat III Ahmedabad v. Ellis Bridge
Gymkhana , (1998) 1 SCC 384. Reliance has also been placed on the
decision of this Court in 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, and Union
of India v. Popular Construction Co., (2001) 8 SCC 470.
18. It was also urged that section 27 is a remedy available to the
assessee for the refund of duty paid and section 28 is a remedy available
to the Department on the recovery of duty not levied and short levied or
erroneously levied. Both the remedies can be availed without fili ng
371
appeals. It was further urged that no appeal can be filed under section
128 of the Customs Act against the bill of entry. As the s cheme of
assessment under Section 17 of the Customs Act is t hat of self-
assessment and only when such a self-assessment is dispute d by the
proper officer, an order of assessment is passed then he may appe al to
the relevant appellate authority within 60 days of the communication of
the order. It is only in a situation where speaking order is passe d then
the assessee is required to file an appeal. Unless a s peaking order of
assessment is passed, no appeal can lie and the only option for refund of
duty paid is to file a refund claim. The bill of entry is merely stamped to
allow clearance of the goods. No reasons are provided in the bill of
entry on account of which it can be regarded as an order which can be
subjected to appeal under section 128 of the Customs Act. The judgment
of this Court in Commissioner of Customs v. Sayed Ali (265) ELT 17
(SC) is not relevant. The said judgment was passed in respect of section
28 of the Customs Act.
19. On behalf of the Union of India/Department, it is contended
that self-assessment is an assessment. It is not open to the proper officer
after accepting the self-assessment to entertain a claim for refund in the
absence of the self-assessment being questioned in the app eal. The
direction to reassess the bill of entry after the expiry of more than a year
cannot be ordered. Reliance has been placed on Collector of Central
Excise, Kanpur v. Flock (India) Pvt. Ltd. , 2000 (120) ELT 285 (SC).
In the instant case, the bills of entry were filed and th ey were self-
assessed. It is an assessment under the Act and in case benefit of
notification has not been claimed, in the absence o f challenge to
assessment of bills of entry by way of filing the appeal, t he benefit of
notification cannot be claimed. An application for refund is not
maintainable in view of the law laid down by this Court in Flock (India)
Pvt. Ltd. (supra) and Priya Blue Industries (supra). Once the self-
assessment/assessment attains finality and has not been qu estioned, it
cannot be reopened at any point of time. The refund claim is not a n
appellate proceeding. The officer considering a refund claim cannot sit
in appeal over an assessment made by a competent officer. The officer
considering the refund claim cannot also review an assess ment order.
Even after the amendment is made in 2011, the conditionality of payment
having been made pursuant to an order of assessment continue to exist.
As the self-assessment of bills of entry is an order of assess ment per
se , unless the order of assessment passed under section 2(2) of the Act
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
is appealed before Commissioner of Appeals for modification no claim
for refund can be entertained. The provision of section 128 cannot be
rendered otiose. The amendment has been made in order to simplify the
procedure but the legal effect of the self-assessment is that of assessment.
While processing self-assessment some exercise has to be done. Once
it is accepted, it becomes an order of assessment.
20. Right to appeal is available to any person i.e. to the department
as well as to importer/exporter against an order of self-assessment. Until
and unless assessment order is modified and a fresh order of assessment
is passed and duty redetermined, the refund cannot be granted by way
of refund application. The refund authorities cannot take over the role
of Assessing Officer. The officer considering refund c laim cannot
reassess an assessment order. An assessment order has to be questioned
within the stipulated period of limitation. The refund application cannot
be entertained directly under section 27 unless the order of assessment
is appealed against and is modified.
21. The first question for consideration is whether the assessment
includes self-assessment also. Prior to the amendment by the F inance
Act, 2011 the assessment had been defined in Section 2(2) thus:
“2(2) “assessment” includes provisional assessment,
reassessment and any order of assessment in which the d uty
assessed is nil;”
22. After the amendment of Section 2(2) made by the Finance
Act, 2011 the definition of ‘assessment’ reads thus:
“2(2) “assessment” includes provisional assessment , self-
assessment, reassessment and any assessment in which the duty
assessed is nil;”
23. It is apparent from the amended definition 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.
24. The assessment of duty was provided in section 17 of the
unamended Act prior to 2011. Pre-amended section 17 of the Customs
Act is extracted hereunder:
373
“17. Assessment of duty.—(1) After an importer has entered
any imported goods under section 46 or an exporter has entered
any export goods under section 50 the imported goods or the export
goods, as the case may be, or such part thereof as may be
necessary may, without undue delay, be examined and tested by
the proper officer.
(2) After such examination and testing, the duty, if any, leviable
on such goods shall, save as otherwise provided in section 85, be
assessed.
(3) For the purpose of assessing duty under sub-section (2), the
proper officer may require the importer, exporter or any oth er
person to produce any contract, broker’s note, policy of insurance,
catalogue or other document whereby the duty leviable on the
imported goods or export goods, as the case may be, can be
ascertained, and to furnish any information required for such
ascertainment which is in his power to produce or furnish, and
thereupon the importer, exporter or such other person shall produce
such document and furnish such information.
(4) Notwithstanding anything contained in this section, imported
goods or export goods may, prior to the examination or testing
thereof, be permitted by the proper officer to be assessed to duty
on the basis of the statements made in the entry relatin g thereto
and the documents produced and the information furnished under
sub-section (3); but if it is found subsequently on examination or
testing of the goods or otherwise that any statement in such entry
or document or any information so furnished is not true in respect
of any matter relevant to the assessment, the goods may, without
prejudice to any other action which may be taken under this Act,
be re-assessed to duty.
(5) Where any assessment done under sub-section (2) is contrary
to the claim of the importer or exporter regarding valuation of
goods, classification, exemption or concessions of duty availe d
consequent to any notification therefor under this Act, and in cases
other than those where the importer or the exporter, as th e case
may be, confirms his acceptance of the said assessment in writing,
the proper officer shall pass a speaking order within fifteen days
from the date of assessment of the bill of entry or the shipping bill,
as the case may be.”
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
25. Section 17 as amended by Finance Act, 2011 is extracted
hereunder:
“17. Assessment of duty. — (1) An importer entering any imported
goods under section 46, or an exporter entering any export goods
under section 50, shall save as otherwise provided in section 85,
self-assess the duty, if any, leviable on such goods.
(2) The proper officer may verify the self-assessment of such
goods and for this purpose, examine or test any imported goods or
export goods or such part thereof as may be necessary.
[(3) For verification of self-assessment under sub-section (2), the
proper officer may require the importer, exporter or any other
person to produce any document or information , whereby the duty
leviable on the imported goods or export goods, as the case may
be, can be ascertained and thereupon, the importer, exporter or
such other person shall produce such document or furnish such
information.]
(4) Where it is found on verification , examination or testing of the
goods 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 this Act, re-assess the duty leviable on such
goods.
(5) Where any re-assessment done under sub-section (4) is contrary
to the self-assessment done by the importer or exporter regarding
valuation of goods, classification, exemption or concessions of
duty availed consequent to any notification issued therefor under
this Act and in cases other than those where the impo rter or
exporter, as the case may be, confirms his acceptance of the said
re-assessment in writing, the proper officer shall pass a speaking
order on the re-assessment, within fifteen days from the dat e of
re-assessment of the bill of entry or the shipping bill , as the case
may be.
(6) Where re-assessment has not been done or a speaking orde r
has not been passed on re-assessment, the proper officer may
audit the assessment of duty of the imported goods or export goods
at his office or at the premises of the importer or exporter, as may
be expedient, in such manner as may be prescribed.
375
Explanation.—For the removal of doubts, it is hereby declar ed
that in cases where an importer has entered any imported goods
under section 46 or an exporter has entered any export goods
under section 50 before the date on which the Finance Bill, 2011
receives the assent of the President, such imported goods or export
goods shall continue to be governed by the provisions of section
17 as it stood immediately before the date on which such assent is
received.]”
(emphasis supplied)
26. Section 27 deals with a claim for refund of duty. Provision of
section 27 which prevailed before amendment by Finance Act, 2011 is
extracted hereunder:
“27. (1) Any person claiming refund of any duty—-
(i) paid by him in pursuance of an order of assessment; or
(ii) borne by him,
may make an application for refund of such duty and interest, if
any, paid on such duty to the Assistant Commissioner of Customs
or Deputy Commissioner of Customs-
(a) 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, before the expiry of one year ;
(b) in any other case , before the expiry of six months ,
from the date of payment of duty and interest , if any, paid on such
duty, in such form and manner as may be specified in the regulations
made in this behalf and the application shall be accompanied by
such documentary or other evidence (including the documents
referred to in section 28C) as the applicant may furnish to establish
that the amount of duty and interest , if any, paid on such duty in
relation to which such refund is claimed was collected from, or
paid by, him and the incidence of such duty and interest, if any,
paid on such duty had not been passed on by him to any other
person :
Provided that where an application for refund has been made
before the commencement of the Central Excises and Customs
Laws (Amendment) Act, 1991, such application shall be deemed
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
to have been made under this sub-section and the same shall be
dealt with in accordance with the provisions of sub-section (2):
Provided further that the limitation of one year or six months, as
the case may be, shall not apply where any duty and interest, if
any, paid on such duty has been paid under protest:
Provided also that in the case of goods which are exempt fr om
payment of duty by a special order issued under sub-section (2)
of section 25, the limitation of one year or six months, as the case
may be, shall be computed from the date of issue of such order.
[Provided also that where the duty becomes refundable as a
consequence of judgment, decree, order or direction of the appellate
authority, Appellate Tribunal or any court, the limitation of o ne
year or six months, as the case may be, shall be computed from
the date of such judgment, decree, order or direction.
Explanation I.-For the purposes of this sub-section, “the date of
payment of duty and interest, if any, paid on such duty”, in relation
to a person, other than the importer, shall be construed as “t he
date of purchase of goods” by such person.
Explanation II.-Where any duty is paid provisionally under section
18, the limitation of one year or six months, as the case may be,
shall be computed from the date of adjustment of duty after the
final assessment thereof.
(emphasis supplied)”
27. The provision of Section 27 of the Customs Act as amended
by Finance Act, 2011 is extracted hereunder:
“27. Claim for refund of duty. — (1) Any person claiming refund
of any duty or interest, —
(a) paid by him; or
(b) borne by him,
may make an application in such form and manner as may be
prescribed for such refund to the Assistant Commissio ner of
Customs or Deputy Commissioner of Customs, before the expiry
of one year, from the date of payment of such duty or interest :
377
Provided that where an application for refund has been made
before the date on which the Finance Bill, 2011 receives the assent
of the President, such application shall be deemed to have be en
made under sub-section (1), as it stood before the date on which
the Finance Bill, 2011 receives the assent of the President and the
same shall be dealt with in accordance with the provisions of sub-
section (2):
Provided further that the limitation of one year shall not app ly
where any duty or interest has been paid under protest.
Provided also that where the amount of refund claimed is les s
than rupees one hundred, the same shall not be refunded.
Explanation. — For the purposes of this sub-section, “the date of
payment of duty or interest’’ in relation to a person, other than the
importer, shall be construed as “the date of purchase of goods”
by such person.
(1A) The application under sub-section (1) shall be accompanied
by such documentary or other evidence (including the documents
referred to in section 28C) as the applicant may furnish to establish
that the amount of duty or interest, in relation to which such refund
is claimed was collected from, or paid by, him and the incidence
of such duty or interest, has not been passed on by him to any
other person.
(1B) Save as otherwise provided in this section, the period of
limitation of one year shall be computed in the following manner,
namely: —
(a) in the case of goods which are exempt from payment of duty
by a special order issued under sub-section (2) of section 25 , the
limitation of one year shall be computed from the date of issue of
such order ;
(b) where the duty becomes refundable as a consequence of any
judgment, decree, order or direction of the appellate authori ty,
Appellate Tribunal or any court, the limitation of one year shall be
computed from the date of such judgment, decree, ord er or
direction ;
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
(c) 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 ca se of re-
assessment, from the date of such re-assessment.]
(2) If, on receipt of any such application, the Ass istant
Commissioner of Customs or Deputy Commissioner of Customs
is satisfied that the whole or any part of the duty and interest, i f
any, paid on such duty paid by the applicant is refundable, he may
make an order accordingly and the amount so determined shall be
credited to the Fund:
Provided that the amount of duty and interest, if any, paid on such
duty as determined by the Assistant Commissioner of Customs or
Deputy Commissioner of Customs under the foregoing provisions
of this sub-section shall, instead of being credited to the Fund, be
paid to the applicant, if such amount is relatable to-
(a) the duty and interest, if any, paid on such duty paid by the
importer [or the exporter, as the case may be], if he had not passed
on the incidence of such duty and interest, if any, paid on such
duty to any other person;
(b) the duty and interest, if any, paid on such duty on imports
made by an individual for his personal use ;
(c) the duty and interest, if any, paid on such duty borne by the
buyer, if he had not passed on the incidence of such duty and
interest, if any, paid on such duty to any other person;
(d) the export duty as specified in section 26;
(e) drawback of duty payable under sections 74 and 75;
(f) the duty and interest, if any, paid on such duty borne by any
other such class of applicants as the Central Government may, by
notification in the Official Gazette, specify:
(g) the duty paid in excess by the importer before an order
permitting clearance of goods for home consumption is made
where—
(i) such excess payment of duty is evident from the bill of entry in
the case of self-assessed bill of entry; or
379
(ii) the duty actually payable is reflected in the reassessed bill of
entry in the case of reassessment.
Provided further that no notification under clause (f) of the first
proviso shall be issued unless in the opinion of th e Central
Government the incidence of duty and interest, if any, paid on
such duty has not been passed on by the persons concerned to
any other person.
(3) Notwithstanding anything to the contrary contained in any
judgment, decree, order or direction of the Appellate Tribunal, the
National Tax Tribunal or any Court or in any other provision of
this Act or the regulations made thereunder or any other law for
the time being in force, no refund shall be made except as provided
in sub-section (2) .
(4) Every notification under clause (f) of the first proviso to sub-
section (2) shall be laid before each House of Parliament, if it is
sitting, as soon as may be after the issue of the notification, and, if
it is not sitting, within seven days of its re-assembly, and the Central
Government shall, seek the approval of Parliament t o the
notification by a resolution moved within a period of fifteen days
beginning with the day on which the notification is so laid before
the House of the People and if Parliament makes any modification
in the notification or directs that the notification should cease to
have effect, the notification shall thereafter have effect only in
such modified form or be of no effect, as the case may be, b ut
without prejudice to the validity of anything previously do ne
thereunder.
(5) For the removal of doubts, it is hereby declared that a ny
notification issued under clause (f) of the first proviso to sub -
section (2), including any such notification approved or modified
under sub-section (4), may be rescinded by the Cent ral
Government at any time by notification in the Official Gazette.”
(emphasis supplied)
28. Section 28 deals with the recovery of duties not levied or not
paid or short levied or short paid or erroneously refunded. Section 28(1)
is extracted hereunder:
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
“28. Recovery of duties not levied or not paid or short-levied or
short-paid or erroneously refunded .— (1) Where any duty has
not been levied or not paid or has been short-levied or short-paid
or erroneously refunded, or any interest payable has not been
paid, part-paid or erroneously refunded, for any reason other than
the reasons of collusion or any wilful mis-statement or suppression
of facts,—
(a) the proper officer shall, within two years from the rel evant
date, serve notice on the person chargeable with the duty or interest
which has not been so levied or paid or which has been short-
levied or short-paid or to whom the refund has erroneously been
made, requiring him to show cause why he should not pay the
amount specified in the notice;
Provided that before issuing notice, the proper officer shall hold
pre-notice consultation with the person chargeable with duty or
interest in such manner as may be prescribed;
(b) the person chargeable with the duty or interest, may pay before
service of notice under clause (a) on the basis of,—
(i) his own ascertainment of such duty; or
(ii) the duty ascertained by the proper officer,
the amount of duty along with the interest payable thereon under
section 28AA or the amount of interest which has not been so
paid or part-paid:
Provided that the proper officer shall not serve such show cause
notice, where the amount involved is less than rupe es one
hundred.”
(emphasis supplied)
29. The first question for consideration is whether in the case of
self-assessment without passing a speaking order, it can be termed to be
an order of self-assessment. It was urged on behalf of the assesses that
there is no application of mind and merely an endorsement is made by
the authorities concerned on the bill of entry which cannot be said to be
an order much less a speaking order.
30. In Escorts Ltd. v. Union of India & Ors . (1994) Supp. 3
SCC 86 the question arose for consideration as to the Bill of Entry
381
classifying the imported goods under a certain tariff item and paying the
duty thereon. This Court held that in such a case signing of the bi ll of
entry itself amounted to passing an order of assessment. Hence, the
application seeking a refund on the ground that imported goods fell under
a different item attracting a far lower rate of duty, ha ving been filed
more than six months after the payment of duty, was rightly rejected as
time-barred. What is of significance is that an entry made in the bill of
entry has been held to be an order of assessment passed by the Assessing
Officer. This Court considered the provisions of sections 47 and 17 of
the Customs Act and has observed:
“9. Reading Sections 47 and 17 together, it is clear beyond any
doubt, that as soon as the bill of entry is filed, the proper officer
examines the goods, tests them, assesses the proper duty a nd
permits clearance of goods only after the duty and other charges,
if any, are paid. In the scheme of the Act, there is no room for
contending that any goods will be allowed to be cleared without
assessment of the duty, whether provisional or final, as the cas e
may be.
10. Now it may be noticed that the Act does not prescribe any
particular form in which the order of assessment is to be made. In
the very nature of things, no formal order of assessment c an be
expected when there is no dispute as to the classification or the
rate of duty. No formal order can be expected in such a case, it is
more like ‘across-the-counter’ affair. In the present case, it may
be reiterated that the appellant himself classified the goods under
tariff item No. 73.33/40 and paid the duty at the rate applica ble
thereunder. At that stage, he did not raise any dispute either as to
classification or as to the right of duty applicable. Hence , there
was no occasion for passing a formal order since there was no lis
at that stage. The bill of entry presented by the appellant was
signed, signifying approval by the assessing officer. That itself is
an order of assessment in such a situation. We are, therefore, not
prepared to agree that there is no order of assessment in th is
case , and therefore, the limitation prescribed in Section 27 did not
begin to run. Section 27 is emphatic in language. It says that an
application for refund of duty shall be made before the expiry of
six months from the date on which the duty was paid. In the face
of this provision, the authorities under the Act, including the
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
Government of India, had no option but to dismiss the appellant’s
application. This is also the view taken by this Court in M adras
Rubber Factory Ltd. v. Union of India (1976) 2 SCC 255.”
(emphasis supplied)
31. It is apparent from the aforesaid discussion th at the
endorsement made on the bill of entry is an order of assessment. It
cannot be said that there is no order of assessment passed in su ch a
case. When there is no lis , speaking order is not required to be passed in
“across the counter affair”.
32. 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 othe r
person to produce any contract, broker’s note or any other document as
specified in the proviso and to furnish any require d information.
Notwithstanding that the statements made in the bill of entr y 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 en try or
document or any information so furnished was not true, he could have
proceeded to reassess the duty. Where the assessment done under sub-
section (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).
33. 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 s ection
2(2). It is further provided that proper officer may ve rify 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 t he proper
383
officer and for that purpose under section 17(3), he may require the
importer, exporter or any other person to produce such document an d
furnish such information, etc. If the proper officer on verifi cation 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 of ficer 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 und er
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.
34. 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.
35. 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 us e 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 o f judgment,
decree, order or direction of the appellate authority, Appellate Tribunal
or any court, the limitation of one year or six months shall comme nce
from the date of such judgment, decree, order or direction.
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
36. 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 Assista nt 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 h as
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 ord er
issued under section 25(2) from the date of issue of such an o rder 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 s hall not
apply where any duty or interest has been paid under protest.
37. 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.
38. 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-a ssessment is
nonetheless an order of assessment, no difference is made by de letion
of aforesaid expression as no separate reasoned assessment or der is
required to be passed in the case of self-assessment as observed by this
Court in Escorts Ltd. v. Union of India & Ors . ( supra ).
39. In Collector of Central Excise, Kanpur v. Flock (India )
Pvt. Ltd . 2000 (120) ELT 285 (SC)= (2000) 6 SCC 650, the question
which came up for consideration before this Court was non-chall enge
385
of an appealable order where the adjudicating authority had passed a n
order which is appealable under the statute, and the party aggrieved did
not choose to file an appeal. This Court held that it is not open to the
party to question the correctness of the order of the adjudicating authority
subsequently by filing a claim for refund on the gr ound that the
adjudicating authority had committed an error in passing the order. The
provisions of the Central Excise Act, 1944 came up for considerat ion.
The Court has observed:
“10. Coming to the question that is raised, there is little scope
for doubt that in a case where an adjudicating authority has passed
an order which is appealable under the statute and the party
aggrieved did not choose to exercise the statutory right of filing
an appeal, it is not open to the party to question the correctness of
the order of the adjudicating authority subsequently by fili ng a
claim for refund on the ground that the adjudicating authority had
committed an error in passing its order. If this position is accepted
then the provisions for adjudication in the Act and the Rules, the
provision for appeal in the Act and the Rules will l ose their
relevance and the entire exercise will be rendered redundant. This
position, in our view, will run counter to the scheme of the Act and
will introduce an element of uncertainty in the entire process of
levy and collection of excise duty. Such a position cannot be
countenanced. The view was taken by us also gains support from
the provision in sub-rule (3) of Rule 11 wherein it is laid down that
whereas a result of any order passed in appeal or revision under
the Act, refund of any duty becomes due to any person, the proper
officer may refund the amount to such person without his having
to make any claim in that behalf. The provision indicates th e
importance attached to an order of the appellate or revisiona l
authority under the Act. Therefore, if an order which is appealable
under the Act is not challenged then the order is not liable to be
questioned and the matter is not to be reopened in a procee ding
for the refund which, if we may term it so, is in the nat ure of
execution of a decree/order . In the case at hand, it was specifically
mentioned in the order of the Assistant Collector that the assessee
may file an appeal against the order before the Collector (Appeals)
if so advised.”
(emphasis supplied)
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
40. In Priya Blue Industries Ltd. v. Commissioner of Customs
(Preventive) 2004 (172) ELT 145 (SC)= (2005) 10 SCC 433, the Court
considered unamended provision of Section 27 of the Customs Act and
a similar submission was raised which was rejected by this Court
observing that so long as the order of assessment stands, the duty would
be payable as per that order of assessment. This Court has ob served
thus:
“6. We are unable to accept this submission. Just such a contention
has been negatived by this Court in Flock (India) case (2000) 6
SCC 650. Once an order of assessment is passed the duty would
be payable as per that order. Unless that order of assessment has
been reviewed under Section 28 and/or modified in an appeal,
that order stands. So long as the order of assessment stands the
duty would be payable as per that order of assessment. A refund
claim is not an appeal proceeding. The officer considering a refund
claim cannot sit in appeal over an assessment made by a competent
officer. The officer considering the refund claim cannot also review
an assessment order.
7. We also see no substance in the contention that provision for a
period of limitation indicates that a refund claim could be filed
without filing an appeal. Even under Section 11 under the Excise
Act, the claim for refund had to be filed within a period of si x
months. It was still held, in Flock (India)’s case (supra), that in the
absence of an appeal having been filed no refund claim could be
made.
8. The words “in pursuance of an order of assessment” only
indicate the party/person who can make a claim for refund. In
other words, they enable a person who has paid duty in pursuance
of an order of assessment to claim the refund. These words do
not lead to the conclusion that without the order of assessment
having been modified in appeal or reviewed a claim for refund
can be maintained.”
(emphasis supplied)
41. 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 a uthority
which processes the refund to make a fresh assessment on merits and
to correct assessment on the basis of mistake or otherwis e.
387
42. It was contended that no appeal lies against the order of self-
assessment. The provisions of Section 128 deal with appeals to the
Commissioner (Appeals). Any person aggrieved by any decision or order
may appeal to the Commissioner (Appeals) within 60 days. Ther e is a
provision for condonation of delay for another 30 days. The provisions
of Section 128 are extracted hereunder:
“128. Appeals to [Commissioner (Appeals)]. — (1) Any person
aggrieved by any decision or order passed under this Act by an
officer of customs lower in rank than a [Principal Commissioner
of Customs or Commissioner of Customs] may appeal to t he
[Commissioner (Appeals)] [within sixty days] from the date o f
the communication to him of such decision or order:
[Provided that the Commissioner (Appeals) may, if he is satisfied
that the appellant was prevented by sufficient caus e from
presenting the appeal within the aforesaid period of sixty da ys,
allow it to be presented within a further period of thirty days.]
[(1A) The Commissioner (Appeals) may, if sufficient cause i s
shown, at any stage of hearing of an appeal, grant time, from time
to time, to the parties or any of them and adjourn the hearing of
the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than
three times to a party during hearing of the appeal.]
(2) Every appeal under this section shall be in such form and shall
be verified in such manner as may be specified by rules made in
this behalf.”
43. 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 o f 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 ass essment 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
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]
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 ampl itude.
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, is contrary to what has been held by this Court in
Escorts (supra).
44. 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. I n other
words, the order of self-assessment is required to be followe d unless
modified before the claim for refund is entertained under Se ction 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 exem ption 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 ref und
provisions under Section 27. In Hero Cycles Ltd. v. Union of India
2009 (240) ELT 490 (Bom.) though the High Court interfered to direct
the entertainment of refund application of the duty paid under the mistake
of law. However, it was observed that amendment to the original order
of assessment is necessary as the relief for a refund of cla im is not
available as held by this Court in Priya Blue Industries Ltd . ( supra ).
45. Reliance was also placed on a decision of Rajasthan High
Court with respect to service tax in Central Office Mewar Palace
Org. v. Union of India 2008 (12) STR 545 (Raj.). In view of the
aforesaid discussion, we are not inclined to accept the reasoning adopted
by the High Court, that too is also not under the provisions of the Customs
Act.
389
46. The decision in Intex Technologies (India) Ltd. v. Union of
India has followed Micromax (supra). 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.
47. When we consider the overall effect of the provisions prior to
amendment and post-amendment under Finance Act, 2011, we are of
the opinion that the claim for refund cannot be entertained unl ess 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.
48. Resultantly, we find that the order(s) passed by Customs,
Excise, and Service Tax Appellate Tribunal is to be upheld and that passed
by the High Courts of Delhi and Madras to the contrary, deserves to be
and are hereby set aside. We order accordingly. We hold that the
applications for refund were not maintainable. The appeals are
accordingly disposed of. Parties to bear their own costs as incurred.
Nidhi Jain Appeals disposed of.
ITC LIMITED v. COMMISSIONER OF CENTRAL EXCISE,
KOLKATA IV [ARUN MISHRA, J.]