2023 Supreme(Online)(CESTAT) 436

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

NEW DELHI

PRINCIPAL BENCH

CUSTOMS APPEAL NO. 51132 OF 2020

(Arising out of Order-in-Appeal No. CCA/Customs/D-I/Import/NCH/616-621/2020-21

dated 24.08.2020 (received on 28.08.2020) passed by Commissioner of Customs

(Appeals), NCH, New Delhi)

Principal Commissioner of Customs,

…Appellant

ACC (Import) Commissionerate,

New Customs House,

New Delhi-110037

Versus

M/s Lava International Limited,

…Respondent

A-56, Sector-64, Noida,

Uttar Pradesh-201301

With

CUSTOMS APPEAL NO’s.

50236 of 2021

50237 of 2021

50238 of 2021

50239 of 2021

and

50240 of 2021

APPEARANCE:

Shri Mihir Ranjan, Special Counsel and Ms. Jaya Kumari, Authorized

Representative for the Department

Shri B.L. Narasimhan, Shri Rachit Jain and Shri Ashwani Bhatia, Advocates for

the Appellant

CORAM:

HON’BLE MR. JUSTICE DILIP GUPTA, PRESIDENT

HON’BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)

Date of Hearing: 30.11.2022

Date of Decision: 10.02.2023

FINAL ORDER NO. _50112-50117/2023_

JUSTICE DILIP GUPTA:

M/s Lava International Limited¹, respondent in all the six appeals

filed by the department, imported mobile phones during February 2014

to July 2014 classifying them in the Bills of Entry under Customs Tariff

1.

the respondent

2

C/51132/2020 & 5 others

Item ² 8517 12 90 of the First Schedule to the Customs Tariff Act,

1975³. The respondent also imported parts and accessories of mobile

phones during the said period. Additional duty of customs ⁴ leviable

under section 3(1) of the Tariff Act @ of 6% under Serial No. 263A of

the Notification No. 12/2012-CE dated 17.03.2012 was paid by the

respondent. Under the said Notification a manufacturer is also given an

option to pay excise duty at the rate of 1% on mobile phones subject to

the fulfillment of the condition that CENVAT credit on inputs and capital

goods is not claimed under rule 3 read with rule 13 of the CENVAT

Credit Rules, 2004⁵ for manufacture of the mobile phones. Under Serial

No. 132 of Notification No. 1/2011-CE dated 01.03.2011, as amended

by Notification No. 16/2012-CE dated 17.01.2012, a manufacturer is

also given an option to pay excise duty at the rate of 2% on „parts,

components and accessories namely, battery chargers, PC connectivity

cables, memory card and hands-free headphones of mobile handsets‟

falling under any Chapter under the Tariff Act. This is also subject to the

fulfillment of the condition that CENVAT credit on inputs and capital

goods is not claimed. The above benefits were not availed by the

respondent at the time of import as it was under an impression that it

did not satisfy the condition set out in the Notification.

2.

The issue relating to applicability of conditions of non-availment

of CENVAT credit in relation to the imported goods under the

Notification was settled by the Supreme Court in favour of the importers

in SRF Ltd. vs. Commissioner of Customs, Chennai⁶. The Supreme

2.

CTI

3.

the Tariff Act

4.

CVD

5.

the 2004 Rules

6.

2015 (318) E.L.T. 607 (S.C.)

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C/51132/2020 & 5 others

Court also dismissed the review petition filed by the department and the

decision is reported in 2016 (340) E.L.T. A202(S.C.).

3.

After the aforesaid judgment was delivered by the Supreme

Court in SRF, the respondent filed letters dated 16.05.2015 and

05.06.2015 for re-assessment of the Bills of Entry and also claimed

refund of differential CVD. This refund request was rejected verbally and

the respondent was asked to get re-assessment of these Bills of Entry.

The Bills of Entry were initially re-assessed in March 2018 by the

Deputy Commissioner by manually/physically making the requisite

changes in the duty liability on the face of the Bills of Entry, but the

Deputy Commissioner, by a letter dated 22.11.2018, amended the re-

assessment orders under section 154 of the Customs Act, 1962⁷ to the

effect that the word „re-assessed‟ was directed to be read as

„amendment‟ under section 149 of the Customs Act. This order

amending the Bills of Entry has been accepted by the customs

authorities as no appeal has been filed by the department.

4.

Consequently, the respondent applied for refund of differential

CVD and the details of the six refund applications are as follows:

S.

No.

Date of filing Refund

Claim

Amount of Refund (in

Rs.)

1.

15.06.2018

6,86,36,737

2.

15.06.2018

7,29,79,493

3.

28.06.2018

4,83,13,149

4.

15.06.2018

2,41,26,536

5.

04.05.2018

7,12,89,293

6.

28.06.2018

9,03,97,041

Total

37,57,42,248

5.

These six refund applications were rejected by a common order

dated 25.11.2019 by the Assistant Commissioner for the reason that

7.

the Customs Act

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C/51132/2020 & 5 others

they were time barred and for the reason that the Supreme Court in

ITC Ltd. vs. Commissioner of Central Excise, Kolkata-IV and

others⁸ had held that an assessment order can be challenged in an

appeal filed under section 128 of the Customs Act.

6.

The respondent filed six appeals against the said order dated

25.11.2019 before the Commissioner (Appeals), which appeals were

allowed by order dated 21.08.2020 for the following reasons:

(i)

The Bills of Entry were amended and no appeal has

been filed by the department against such orders.

Thus, the orders attained finality and it would not be

open for the refund sanctioning authority to challenge

them while dealing with refund applications;

(ii)

Refund has been filed consequent to amendment made

in the Bills of Entry. Thus, refunds filed within one year

from date of such amendment cannot be said to be

time barred; and

(iii)

The Supreme Court in ITC held that the claim for

refund cannot be entertained unless the order of

assessment is modified in accordance with law by

taking recourse to appropriate proceedings and it does

not restrict such proceedings only to an appeal filed

under section 128 of the Customs Act.

7.

The relevant portions of the aforesaid order dated 21.08.2020

passed by the Commissioner (Appeals) are reproduced below:

“5.4.9

Thus if the self-assessment is modified

under any of the above provisions of the Act and the

same results in lowering of duty liability than what was

paid on account of self-assessment, refund claim would

8.

2019 (368) E.L.T. 216 (S.C.)

5

C/51132/2020 & 5 others

arise and the same has to be entertained under section

27 of the Customs Act, 1962. Hon’ble Supreme Court

has nowhere stated that reassessement can only

be done after obtaining an appellate order by

filing appeal under section 128 of the Act. Thus, I

find no contradiction in the reassessments done

and the law laid down by Hon’ble Supreme Court

in ITC Ltd. [2019 (368) ELT 246 (SC)].

5.5

Another plea that has been taken by the Refund

Sanctioning Authority is that the reassessment done by

the Deputy Commissioner Gr VA was modified to

„amendment under Section 149 of the Act‟ by the

Deputy Commissioner Gr VA in terms of powers

conferred to him under section 154 of the Act. Without

going into merits of this action of Deputy Commissioner

Gr VA, even if it is accepted that bills of entry

were not reassessed but amended under section

149 of the Act, the fact still remains that the

assessment

in

the

impugned

BoEs

got

modified/amendment was in accordance with the

law and entitled the Appellant refund of excess

CVD paid.

*****

5.7.3 For argument sake, even if it is accepted

that bills of entry were not reassessed but

amended under section 149 of the Act, the claims

are still within time. It is admitted fact that by way of

reassessment (or amendment under Section 149 of the

Act), the bills of entry has been modified and CVD rate

has been shown to be leviable @1% and the CVD

amount has also been modified. Evidently, CVD paid

was more than the amount indicated

by such

reassessment (or amendment under Section 149 of the

Act). Thus, the cause of action for claiming refund

arose only after such amendment. It is trite law

that limitation period would start from the date of

cause of action in such cases. There are several

case laws which lay down that in cases of amendment

or rectification of bills of entry, the limitation for filing

refund claim would start from the date of such

amendment or rectification.”

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C/51132/2020 & 5 others

(emphasis supplied)

8.

Shri Mihir Ranjan, learned special counsel appearing for the

department

assisted

by

Ms.

Jaya

Kumari,

learned

authorized

representative for the department submitted that:

(i)

The Commissioner (Appeals) erred in not appreciating

the correct factual and legal position;

(ii)

The respondent had necessarily to file an appeal

against the assessment order;

(iii)

The Commissioner (Appeals) overlooked the fact that

after the order was passed, the officer had become

functus officio;

(iv)

The Commissioner (Appeals) failed to appreciate that

as per section 27 (1B)(b) of the Customs Act, a refund

is admissible within one year of the date of judgment,

decree, order, or direction as a consequence of which

refund was barred by time;

(v)

The Commissioner (Appeals) wrongly assumed that the

Bills of Entry were re-assessed @1% additional duty of

customs leviable under section 3(1) of the Tariff Act

based on the judgment of the Supreme Court in the

SRF as the Assistant Commissioner could not have

made a re-assessment, as only an appeal could have

been filed; and

(vi)

The Commissioner (Appeals) erred in considering the

case as falling under section 154 of the Customs Act.

9.

Shri B.L. Narasimhan, learned counsel for the respondent

assisted by the Shri Rachit Jain and Shri Ashwani Bhatia submitted that:

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C/51132/2020 & 5 others

(i)

The respondent had sought amendment in the Bills of

Entry and the Bills of Entry were amended in the year

2018. This would be in accordance with the judgment

of the Supreme Court in ITC and refund can be claimed

on the basis of such amendment made under section

149 of the Customs Act;

(ii)

The respondent correctly claimed refund of duty paid by

it and such refund is in consonance with the provisions

of the Customs Act and the judgment of the Supreme

Court in ITC;

(iii)

The amendment in the Bills of Entry attained finality in

the absence of an appeal and the Deputy Commissioner

does not have the power to review his own order;

(iv)

The claim for refund is not time barred; and

(v)

Sections 17 or 149 of the Customs Act do not provide

time limit for seeking amendment of the Bills of Entry.

10.

The submissions advanced by the learned special counsel

appearing for the department and the learned counsel for the

respondent have been considered.

11.

It transpires that the respondent had earlier filed Bills of Entry in

respect of the imported mobile phones and parts and accessories of

mobile phones but did not claim the benefit of the Notifications under

which a manufacturer is given an option to pay lesser rate of duty

subject to fulfillment of certain conditions. Subsequently, in view of the

decision of the Supreme Court in SRF regarding the conditions attached

to the Notification, the Bills of Entry were amended in 2018 by the

Deputy Commissioner, which order attained finality as no appeal was

filed by the department to assail this order. Refund applications filed by

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C/51132/2020 & 5 others

the respondent were, however, rejected by the Assistant Commissioner

for the reason that not only were they time barred, but otherwise also

the respondent should have filed appeals against the assessment order

rather than seeking amendment in view of the decision of the Supreme

Court in ITC. The Commissioner (Appeals), however, allowed the

appeals filed by the respondent holding that neither were the refund

claims barred by time nor was it necessary for the respondent to file

appeals against the assessment order when the respondent had sought

amendment in the Bills of Entry and the Bills of Entry were amended,

which order had attained finality.

12.

Two issues would, therefore, have to be examined in this appeal,

namely, as to whether refund could have been claimed by the

respondent as the Bills of Entry were amended under section 149 of the

Customs Act and whether the refund claims filed by the respondent

were barred by time.

13.

In regard to the first issue much emphasis has been placed by

the learned special counsel appearing for the department on the

decision of the Supreme Court in ITC. The issue involved before the

Supreme Court in all the Civil Appeals was whether, in the absence of

any challenge to the order of assessment in appeal, any refund

application against the assessed duty can be entertained. The Bench of

the Tribunal at Kolkata had opined that unless the order of assessment

is appealed, no refund application against the assessed duty can be

entertained. On the other hand, the Delhi High Court had opined that

when there is no assessment order for being challenged in appeal,

because there is no contest or lis and hence no adversarial adjudication,

a refund application can be maintained even if appeals are not filed

9

C/51132/2020 & 5 others

against the assessed bills of entry. The Madras High Court had also

similarly opined. The first question that arose for consideration before

the Supreme Court was whether a self-assessment, when there is no

speaking order, 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 in

such a situation and merely an endorsement is made by the authorities

concerned on the Bills of Entry which endorsement cannot be said to be

an order, much less a speaking order. This contention of the assesses

was not accepted by the Supreme Court and it was held that the

endorsement made on the Bills of Entry would be an order of

assessment and that when there is no lis, a speaking order is not

required to be passed in “across the counter affair”. The Supreme Court

then examined the provisions of sections 17 and 27 of the Customs Act,

both prior to the amendments made by Finance Act 2011 and after the

amendments, and observed that there is no difference even after the

amendments as self-assessment is also an assessment.

14.

It needs to be noted that in Escorts Ltd. v. Union of India &

Ors⁹, the issue that had arisen for consideration before the Supreme

Court was regarding the Bills of Entry classifying the imported goods

under a particular tariff item and payment of duty thereon. The

Supreme Court held that in such a case signing the Bills of Entry itself

amounted to passing an order of assessment and, therefore, an

application seeking refund on the ground that the imported goods fell

under a different tariff item attracting lower rate of duty, should be filed

within six months after the payment of duty. The Supreme Court,

9.

2002-TIOL-2706-SC

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C/51132/2020 & 5 others

therefore, held that the signature made in the Bills of Entry was an

order of assessment of the assessing officer.

15.

The Supreme Court, thereafter, in ITC observed that the

provisions relating to refund were more or less in the nature of

execution proceedings and it would not be open to an authority, while

processing a refund application, to make a fresh assessment on merits.

The relevant portions of the judgment of the Supreme Court are

reproduced below:

“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.

In

other

words,

the