By TIOL News Service

MUMBAI, SEPT 10, 2014: THE brief facts are that the appellant are manufacturers of P&P medicaments and they imported a consignment of 11600 Mestinone, 60mg tablets and filed Bill of Entry. The Bill of Entry was assessed and duty was paid accordingly. Later on, the appellant realised that they are entitled for exemption under Notification No. 11/97-Cus & were not required to pay duty on the above said imported goods. Therefore, they filed refund claim before the Dy. Commissioner of Customs, Mumbai who sanctioned their refund claim but the same was credited to Consumer Welfare Fund on the ground that the appellant failed to pass the burden of unjust enrichment.

The appellant filed an appeal but the Commissioner(A) dismissed the same by relying on the decision of the apex court in the case of Flock (India) Pvt. Ltd. 2002-TIOL-208-SC-CX, on the ground that, the appellant has not challenged the assessment of the Bill of Entry and, therefore, their refund claim is not maintainable.

Aggrieved from the said order, the appellant is before the CESTAT.

After hearing both sides, the Member (Judicial) referred to the decision in Bennett Coleman & Co. Ltd. 2008-TIOL-1341-CESTAT-BANG & after reproducing extensively from the decision in Sesa Goa Ltd. 2010-TIOL-1729-CESTAT-MUM observed that the same is squarely applicable to the present case inasmuch as in view of the Punjab & Haryana High Court decision in Bansal Alloys & Metals Ltd.= (2009-TIOL-722–HC–P&H-CUS) cited therein, while assessing the Bill of Entry, the proper officer had failed to give the benefit of Notification No. 11/97-Cus to the appellant and, therefore, demanded duty; that it was the responsibility of the assessing/proper officer to assess/re-assess the Bill of Entry and correctly determine the duty leviable in accordance with law and having failed to do so, the proper officer had caused great injustice to the importer and it was open to the importer to file an application for refund under Section 27 of the Act without recourse to challenging the assessment on the Bill of Entry in terms of provisions of Section 149 of the Customs Act, 1962 which permits amendment of a Bill of Entry after clearance of goods for home consumption based on documentary evidence which was on record at the time of clearance of the goods.

In fine, the Member(J) took a view that the matter needs to be remanded to the appellate authority to decide whether the bar of unjust enrichment is applicable to the facts of this case and if the same is not applicable to grant the refund claim of the appellant.

The Member (Technical) took a differing view.

Relying upon the decisions of the apex court in the cases of Flock (India) Pvt. Ltd.2002-TIOL-208-SC-CX & Priya Blue Industries 2004-TIOL-78-SC-CUS the Member(T) observed that the legal position laid down in these judgments is that without challenging the order of assessment, the assessee cannot claim a refund and try to reopen the assessment by means of a refund claim; that there was no ambiguity in the orders and it laid down the legal position with consummate clarity; that the Deputy Commissioner while accepting the contention of the assessee that they were eligible for exemption under notification 11/97-Cus but rejecting the refund claim on the ground of unjust enrichment was reviewing his own order for which he had not powers; that the Commissioner(A) while rejecting the appeal filed by the appellant had very correctly and rightly pointed out that the order passed by the adjudicating authority was void ab initio and it was passed without any authority of law inasmuch as the lower adjudicating authority could not review his order of assessment and since the appellant did not challenge the order of assessment, the same cannot be reopened by filing a refund claim.

Referring to the decisions in Industrial House vs. Commissioner of Customs, New Delhi& the Larger Bench decision in Eurotex Industries & Exports Ltd. 2007-TIOL-1184-CESTAT-MUM-LB,the Member (T) concluded that it would be judicial indiscipline, if the matter is remanded to the lower appellate authority for re-consideration of the refund claim in the light of undue enrichment.  In fine, the Member(T) concluded that the decision of Commissioner (A) that the refund claim is not maintainable is correct in law and does not merit any interference whatsoever.

In view of the difference of opinion the matter was referred to the third Member.

This was in the month of December, 2011.

The matter was heard by the third Member on reference in July, 2014 and the Majority order has been pronounced on 8th August, 2014.

The Third Member viz. Member (Technical) observed that the facts of the case in Bansal Alloys & Metals Pvt. Ltd. are very very different and the decision of the Single Member in G.S.Metalica is per incuriam and cannot be applied in other cases. Referring to the decisions of the Supreme Court in the cases of Priya Blue Industries Ltd., Flock (India) Pvt. Ltd. and the Larger Bench decision in Eurotex Industries & Exports Ltd.the third Member on reference concluded that the provisions of Sec. 154 of the Customs Act cannot be invoked in the present situation where the assessment was made without extending the benefit of exemption notification and same cannot be called arithmetical, clerical or error arising from accidental slip or omission.

The third Member on reference, therefore, held that the Member (Technical) is right in holding that the refund claim is not maintainable without challenging the assessment of Bill of Entry and accordingly concurred with the views of Member (Technical).

So, in view of the Majority decision,the appeal filed by the appellant was dismissed.

(See 2014-TIOL-1716-CESTAT-MUM)