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SUPREME COURT OF INDIA
ARUN MISHRA, NAVIN SINHA, INDIRA BANERJEE, JJ.
ITC Limited – Appellant
Versus
Commissioner Of Central Excise, Kolkata IV – Respondent
CIVIL APPEAL NO.2960 OF 2010, CIVIL APPEAL NO.5878 OF 2011, CIVIL APPEAL NO.310 OF 2011, CIVIL APPEAL NOS.4432-4434 OF 2011, CIVIL APPEAL NO.6407 OF 2011, CIVIL APPEAL NOS.1575-1582 OF 2012, CIVIL APPEAL NO.1585 OF 2012, CIVIL APPEAL NO.1571 OF 2012, CIVIL APPEAL NO.5490 OF 2011, CIVIL APPEAL NO.5491 OF 2011, CIVIL APPEAL NO.5489 OF 2011, CIVIL APPEAL NO.6054 OF 2011, CIVIL APPEAL NO.7710 OF 2014, CIVIL APPEAL NO.5960 OF 2016 CIVIL APPEAL NO.96 OF 2016 CIVIL APPEAL NOS. 7384-86 OF 2019 (@ SPECIAL LEAVE PETITION (C) NOS.16114-16116 OF 2017), CIVIL APPEAL NO. 7387 OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.25193 OF 2016) CIVIL APPEAL NO. 7388 OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.26530 OF 2016) CIVIL APPEAL NO. 20852 OF 2017, CIVIL APPEAL NO. 7389 OF 2019, (@ SPECIAL LEAVE PETITION (C) NO.4294 OF 2017), CIVIL APPEAL NO. 7391 OF 2019, (@ SPECIAL LEAVE PETITION (C) NO.6269 OF 2017), CIVIL APPEAL NO. 7392 OF 2019, (@ SPECIAL LEAVE PETITION (C) NO.15175 OF 2017), CIVIL APPEAL NO.18765 OF 2017, CIVIL APPEAL NO. 7393 OF 2019, (@ SPECIAL LEAVE PETITION (C) NO.31561 OF 2017), CIVIL APPEAL NOS. 7394-96 OF 2019 (@ SPECIAL LEAVE PETITION (C) NOS.5040-5042 OF 2018), CIVIL APPEAL NO. 7397 OF 2019, (@ SPECIAL LEAVE PETITION (C) NO.15363 OF 2018) CIVIL APPEAL NO.10082 OF 2018, CIVIL APPEAL NOS. 293-294 OF 2009
Decided on : 18-09-2019
(A) Customs Act, 1962 – Section 27 – Refund of assessed duty – Maintainability of refund application – Right to appeal is available to any person i.e. to 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 re-determined, refund cannot be granted by way of refund application – Refund authorities cannot take over role of Assessing Officer – Officer considering refund claim cannot reassess an assessment order – An assessment order has to be questioned within stipulated period of limitation – Refund application cannot be entertained directly under Section 27 unless order of assessment is appealed against and is modified. (Para 20)
(B) Customs Act, 1962 – Section 27 read with Section 17 (As amended by Finance Act, 2011) – Refund of assessed duty – Maintainability of refund application – Self-assessment, provisional assessment, reassessment and any assessment in which duty assessed is nil, is an assessment – Assessment includes self-assessment – Endorsement made on bill of entry is an order of assessment – It cannot be said that there is no order of assessment passed in such a case – When there is no lis, speaking order is not required to be passed in “across the counter affair”. (Paras 23 and 31)
(C) Customs Act, 1962 – Section 27 read with Sections 17, 18, 28 and 128 – Refund of assessed duty – Maintainability of refund application – It is not open to authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise – Order of self-assessment is an order of assessment – Provisions under section 27 cannot be invoked in absence of amendment or modification having been made in bill of entry on the basis of which self-assessment has been made – Refund proceedings are in nature of execution for refunding amount – It is not assessment or reassessment proceedings at all – While processing a refund application, reassessment is not permitted nor conditions of exemption can be adjudicated – Scope of provisions of refund under Section 27 cannot be enlarged – It has to be read with provisions of Sections 17, 18, 28 and 128 – Claim for refund cannot be entertained unless order of assessment or self-assessment is modified in accordance with law by taking recourse to appropriate proceedings – It would not be within ken of Section 27 to set aside order of self-assessment and reassess duty for making refund – 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 Act – Order(s) passed by Customs, Excise, and Service Tax Appellate Tribunal upheld and passed by High Courts of Delhi and Madras to the contrary, set aside. (Paras 41, 43, 44 and 47)
Facts of Case:
Question involved in these appeals is whether in absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty can be entertained? Present appeals have been preferred by the assessees as well as by Union of India aggrieved by judgment and order passed by the High Courts and Customs, Excise and Service Tax Appellate Tribunal, Kolkata.
Findings of Court:
Order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. Refund proceedings are in nature of execution for refunding amount. It is not assessment or reassessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within scope of provisions as to refund.
Result : Appeals disposed of.
JUDGMENT :
ARUN MISHRA, J.
1. These appeals have been preferred by the assessees as well 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 appeal, 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 against the assessed duty can be entertained. On the other hand, in the cases in which Union of India or the Department has come up in appeal, the 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 Section 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 bill 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 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 Section 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 made 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 order of assessment may not have been reviewed or modified in 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 appellants manufacture paper from both conventional and unconventional raw materials. In the course of the manufacturing activity, waste 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 required to be reprocessed and if that is not possible, then it is rejected and has to be repulped and recycled.
8. The appellant had been paying duty on paper cleared from its factory. The rate of duty of paper manufactured
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