By TIOL News Service

NEW DELHI, MAR 25, 2014: THE facts : the respondent ('the assessee') paid anti-dumping duty under protest in respect of 27 bills of entry under Customs Tariff Heading No. 390390 for import of certain products into India, on which it was claimed that such duty was not leviable. Later, it made a refund claim for Rs. 28,85,394/- on 24.7.2006, which was adjudicated by the Assistant Commissioner (Refund) by an Order-in-Original No. 557/07 dated 25.5.2007. That order rejected the claim on the ground that the respondent should have in the first instance filed an appeal before the Commissioner (Appeals) challenging the assessment order imposing anti-dumping duty, as provided under Section 128 of the Customs Act.

The order relied on two decisions of the Supreme Court. The first was Commissioner of Customs v. Flock (India) Pvt. Ltd., - (2002-TIOL-208-SC-CX), where the Court held that:

"Where an adjudication 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 (sic) had committed an error in passing the order"

The revenue also relies on another decision, in Priya Blue Industries Ltd. v. Commissioner of Customs, - (2004-TIOL-78-SC-CUS) , where the Supreme Court noted:

"6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India)'s case (supra). 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."

The assessee' s claim that the duty was mistakenly paid, without challenging the assessment order, was rejected. The assessee successfully appealed this order to the Commissioner of Customs (Appeals) (' CC( A)' ). The CC( A) held that refund of anti-dumping duty was covered under the special provision of Section 9A(2)(b) of the Customs Tariff Act, 1962 and not under the general provision of Section 27 of the Customs Act, 1962, to which the cited judgments of the Supreme Court relate. For, this reliance was placed on the decision of the Supreme Court in Sneh Enterprises v. Commissioner of Customs, - ( 2006-TIOL-114-SC-AD) . The CC (A) also relied on a previous order of the Supreme Court in Commissioner of Customs (ICD) v. M/s Relaxo Rubber and Anr ., under Civil Appeal no. 7180 and 7181 of 2001 , where the Court held that the CESTAT's conclusion that the goods imported in that case were Styrene Butadiene Co- Polymer, and thus, not subject to anti-dumping duty, did not mandate any interference. The CC( A) held that since the goods imported in this case are of the same description "which has not been denied by the Customs authorities no anti-dumping duty can be levied. Thus, in terms of Section 9A which states that" refund shall be made of so much of the anti-dumping duty which has been collected as in excess of the anti-dumping duty as so reduced , the CC( A) held that the duty paid was liable to be refunded even though the original assessment order was not challenged.

The CC( A)' s order was challenged by the Revenue before the CESTAT, which dismissed the appeal, holding that first, merely because the authority conducting the original assessment failed to appreciate the provisions of the Customs Tariff Act is no reason to prejudice the importer; secondly, the reasoning of the CC(A) as regards the applicability of Section 9A(2)(b), as opposed to Section 27 of the Customs Act, was correct; and finally, the respondent in this case had paid the duty under protest, thus indicating that, in any case, it contested the levy of the anti-dumping duty.

Accordingly, the following questions of law arise in this case:

(i). Whether the CESTAT ought to have found that Section 9A(2)(b) of the Customs Tariff Act does not apply in this case as it is related only to those circumstances where anti-dumping duty is provisionally determined pending finalization of investigations and not in cases such as the present;

(ii). Whether the CESTAT erred in its decision that Section 9A(8) of Customs Tariff Act (which makes provision of Customs Act, 1962 relating to refunds under Section 27 also applicable to anti-dumping duty), was inserted by Finance Act, 2004, and that the amendment thereto by Finance Act, 2009 applicable retrospectively with effect from 01.01.1995 will apply in this case?

The High Court observed,

It would be necessary to notice that the charging provision under CTA, i.e. Section 3, never envisioned a duty of the kind imposed under Section 9A. CTA applied, as originally visualized, to countervailing and additional duties; the Supreme Court in its decisions recognised that these duties were of customs. However, that anti-dumping duty is not a duty of customs ; Section 9A itself clarifies that the imposition of duty is dependent upon existence of circumstances and a provisional finding- confirmed by later final findings that import of a particular article is injurious to Indian industry. The rate of duty and the terms on which it is imposed are also dependent upon the extent of injury determined. Thus, unlike the incidence of duty, which occurs immediately upon the importation of goods, here, the imposition of duty is dependent upon existence of certain determined circumstances.

The scheme of anti-dumping duty under the CTA also provides for refund claims. The mechanism for refund of the duty imposed provisionally under Section 9A(2) pending determination in accordance with Section 9A, is indicated in Section 9A(2)(b). The mechanism for refund of duty imposed under Section 9A(1) after final determination, if the importer can show that he has paid a duty in excess of the actual margin of dumping for the imported article, is indicated in Section 9AA. The Central Government is empowered to make rules to provide the manner in which the application for a refund claim can be made under Section 9AA under Section 9AA(2). This being the case, the mechanism for refund in the Customs Act under Section 27, for claim of refund per se, does not apply.

The applicability of Section 9A(8) to incorporate Section 27 of the Customs Act, in the opinion of this Court, would be after the final determination of applicability of anti-dumping duty under Section 9A(1), only 'as far as may be' applicable keeping in mind Section 9AA. This is because, Section 9AA appears to be a complete code for refund claims after final determination, given that the Central Government is empowered to make rules regarding the manner and the time within which claims for refund may be made, under Section 9AA(2) of the CTA. Thus, Section 9A(8) would operate to incorporate Section 27 of the Customs Act only as far as may be applicable , in absence of rules on limitation, until they are made/alongside the rules once made.

Thus, this Court is of the opinion that in the absence of rules under Section 9AA(2)(i), the limitation period of one year for making a refund application would be as indicated in Section 27(1B)(b), which reads:

"Section 27 - Claim for refund of duty

(1B) Save as otherwise provided in this section, the period of limitation of one year shall be computed in the following manner, namely :-

(a) XXXXXX XXXXXX

(b) 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;

(c) XXXXXX XXXXXX"

In the present case, the duty became refundable as a consequence of the order of the Supreme Court in Commissioner of Customs v. M/s Relaxo Rubber and Anr . under Civil Appeal no. 7180/7181 of 2001 on March 8, 2006.The refund application, therefore, must be filed by the assessee within one year from the date of the order in Relaxo Rubber, i.e. March 8, 2006. The refund application having been made on July 24, 2006 was thus made within the limitation period.

Retrospective application of Section 9A(8) : To answer the question of retrospective application of the 2009 Amendment to Section 9A(8), it is pertinent to note that this amendment was made via the Finance (No. 2) Act, 2009 w.e.f. 1st January, 1995. Section 9A(8) now reads:

"(8) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to the date for determination of rate of duty, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act."

Section 27 of the Customs Act is to be incorporated through this provision, as regards refund claims w.e.f. 1st Jan 1995, only 'as far as may be' applicable, i.e. as far as is not covered by Sections 9A and 9AA of the CTA. As concluded earlier, since Section 9AA of the CTA is a complete code , Section 9A(8) has extremely restricted application in its allusion to provisions of the Customs Act, 'so far as may be' in their application to the CTA itself.'

The questions of law framed are thus answered against the revenue and in favour of the assessee.

(See 2014-TIOL-362-HC-DEL-CUS)