By TIOL News Service

MUMBAI, JAN 30, 2013: THE appellant had imported SAP software from SAP AG, a German corporation. There was a dispute regarding the valuation of the goods; therefore, the DRI, Bangalore initiated an inquiry against the appellant. During the course of investigation, one of the officials of the appellant admitted the undervaluation of the software. Pursuant to the enquiry, the appellant paid an amount of Rs.70,19,299/- (duty of Rs.53,04,000/- and rest is interest) without prejudice to their contention, in December, 2008.

The appellant waited for the show cause notice for some time. Probably they lost their patience so in the month of June, 2009 they filed a refund claim in respect of the amount so deposited by them.

Two months later a SCN dated 31.08.2009 was issued to the appellant and adjudication of the said SCN is still pending, even at the time of penning this report.

Incidentally, the refund claim was rejected on the premise that the same was pre-mature. As the lower appellate authority upheld this view, the appellant is before the CESTAT.

The appellant submitted that since the amount deposited by them during the course of investigation has not been adjusted against any duty demand, therefore, the same has to be refunded. Reliance is placed on the following decisions to justify their stand - Florida Electrical Industries Ltd. vs. CCE, Delhi - (2004-TIOL-1176-CESTAT-DEL) & Raghu Exports vs. Union of India - (2008-TIOL-785-HC-P&H-CUS).

The Revenue representative strongly opposed the contention of the appellant and submits that in this matter the appellant themselves have admitted their duty liability during the course of investigation and they have voluntarily paid the duty amount; that although the show-cause notice has been issued in the year 2009 but in this case there are more than 150 parties and against all of whom investigations were being carried out by DRI; One adjudicating authority has been appointed by the CBEC only in March, 2012 and that is why adjudication could not take place till date; the decisions relied on by the appellant is not relevant to the facts of this case as in those cases the payment was made under force; that the payment made by the appellant is to be deemed under section 28(2)(b) of the Customs Act, 1962 and, therefore, the refund claim filed by the appellant is correctly rejected.

The Bench observed -

"7. It is a fact on record that the appellant paid the amount mentioned here-in-above during the course of investigation. A show-cause notice was issued in August 2009 but the adjudication of the said show-cause notice has not been finalized till to-date. The case law, relied on by the learned Counsel have dealt with the issue where the duty has been paid during the course of investigation and the adjudication could not be finalized particularly in the case of Raghu Exports (supra) wherein the Hon'ble High Court of Punjab & Haryana has reported the facts that " there is no amount outstanding against the petitioner but still under duress and threat the partners of the petitioner were forced to deposit the draft of Rs.1 crore and post dated cheques of Rs.1.5 crores. The fact is disputed by the counsel for the respondents. He states that the said draft was deposited by the partners of the petitioner along with the cheques voluntarily when the search and seizure was conducted by the department. It has been pointed out by him that the investigation is under way and the liability of the petitioner could go much more than the amount voluntarily deposited by the petitioner. He has further stated that the cheques of Rs.1.5 Crores were presented to the bank and same have bounced. He contends that the prayer of the petitioner thus may not be granted. However, he has not disputed that as of date there is no amount outstanding against the petitioner. " In that set of facts, the Hon'ble High Court of Punjab & Haryana ordered for refund of the amount deposited during the course of investigation.

8. In this case also, it is not disputed that the appellant has paid the amount during the course of investigation but there is no adjudication order and no confirmation of demand as on today against the appellant. In these circumstances, as we are bound by the decisions relied on by the appellant cited herein above, we set aside the impugned order and allow the appeal with consequential relief.

9. The adjudicating authority is directed to expedite the case and sanction the refund claim within thirty days of receipt of this order.

10. Ordered Dasti."

In passing: The High Court of Punjab & Haryana in the case of Raghu Exports (supra) while ordering the DRI to refund the amount of Rs.1 Crore and return the cheques of Rs.1.5 Crores had also mentioned this -

"…The 4 kanals and 4 marlas industrial plot bearing khasra No. 84/21 (8-0), 85/25 (8-0), Varayana Industrial Complex, Varayana, District Jalandhar, in the name of the petitioner, which is free from any encumbrances, shall be kept as security to meet any further demand of revenue."

If it is a case of s.28(2) of CA, 1962…then why was the SCN issued!

High Court…here we come…

(See 2013-TIOL-182-CESTAT-MUM)