JUNE 17, 2024

By S K Rahman, IRS, working as AR at Delhi CESTAT

(Part 2 of Series of Two Articles)

THE CESTAT has passed Final Order No. 55859-55891/2024 dated 04.06.2024 - 2024-TIOL-528-CESTAT-DEL in the cases of Vishal Video & Appliances Pvt. Ltd. on the issue of recovery of erroneously sanctioned refund of Rs 4.55 Cr and also rejection of application for re assessment of Bills of Entry for refund purposes on limitation of time.

2. The Order covers

(a) Vishal Video & Appliances Pvt. Ltd Vs Commissioner of Customs, ACC (Import), New Custom House, New Delhi in Customs Appeal No. 50091 of 2022 and Customs Appeal No 50286 of 2022 on the issue of recovery of erroneously sanctioned refund of Rs 2.37 Cr +Rs 2.18Cr =Rs 4.55 Cr arising out of Order-in-Original No. 03-04/2021-22 dated 24.05.2021 passed by Principal Commissioner of Customs, ACC (Imports), New Custom House, New Delhi. This aspect has been discussed last week.

(b) Vishal Video & Appliances Pvt. Ltd Vs Commissioner of Customs,ACC (Import), New Custom House, New Delhi in Customs Appeal Nos. 50510 of 2021 to 50540 of 2021 (31 appeals) on the issue of application for re assessment of Bills of Entry for refund purposes on limitation of time arising out of Order-in-Appeal No. CC(A)/Customs/D-I/Import/NCH/808-838/2020- 21 dated 17.12.2020 passed by Commissioner of Customs (Appeals), New Delhi. The details are being presented this week

3 In the Part 1 of the series of two articles, the first set of appeals dealing with recovery of erroneously sanctioned refund was discussed. In the Part 2 of the series of two articles, the second set of appeals dealing with application for re assessment is proposed to be discussed as below :

4 Just to refresh, the brief facts of the case are as follows :

5 The Appellant has imported mobile phones by paying Additional Duty of Customs at the rate of 6% / 12.5% during the period 17-10-2014 to 17-07-2015 (31 bills). After the Hon'ble Supreme Court judgement in the matter of SRF Ltd, - 2015-TIOL-74-SC-CUS, dated 26.03.2015, the Appellant importer has claimed benefit of serial No.263A for paying Additional Duty of Customs at the rate of 1% which was available to the manufacturers on fulfilment of condition of non availment of CENVAT credit on Inputs and Capital goods

6 For these 31 Bills of entry the appellant has claimed refund of differential additional duty of customs paid by Rs 2.37 Cr +Rs 2.18Cr =Rs 4.55. The amount was initially rejected vide order dated 30-06-2016. But as per the judgement dt 05-09-2016 of Hon'ble High Court of Delhi the refund was sanctioned vide Order dt 27-09-2016. Then the Commissioner ACC Import, New Delhi issued show cause notice Vlll(1)20/Ref/1399-D/2015 dated 26.09.2018 for recovery of erroneously sanctioned refund of Rs 4.55 crores. The Principal Commissioner has passed OIO dt 24-05-2021 confirming the demand of Rs. 4.55Cr The same has been upheld by Hon'ble CESTAT Final Order No. 55859-55891/2024 dated 04.06.2024 - 2024-TIOL-528-CESTAT-DEL

7 To re capitulate, the chronology of events is as follows :

8 Appeal Nos C/50510/21 to C/50540/21 (31 appeals):- As can be seen in the Chronology chart above, after delivery of Hon'ble Supreme Court judgement in the case of ITC Limited vs. Commissioner of Customs, Kolkata, 2019-TIOL-418-SC-CUS-LB, Appellant filed appeals on 17-12-2019 with Commissioner(Appeal) with a prayer for re-assessment of the assessment of same 31 Bs/E along with application under section 14 of the Limitation Act, 1963 seeking exclusion of time in computation of limitation period.

9 The Commissioner (Appeals) passed OiA dated 17-12-2020 rejecting the 31 appeals filed by the appellant on the ground of time limitation. Appellants filed appeal before Hon'ble CESTAT against the OiA dated 17-12-2020. The present Appeal Nos Appeal Nos C/50510/21 TO C/50540/21 (31 appeals), are against such rejection for re assessment.

10 In these two appeals, the contentions of the appellant are as follows :

11 Appeal Nos C/50091/2022 and C/50286/2022 INSTEAD OF REVIEW OF REFUND SANCTION ORDER, SCN WAS ISSUED:- The Learned counsel for the appellant submitted that SCN is bad as the refund sanctioning order dt. 28-09-2016 has not been challenged and have already attained finality. Consequently the impugned order is also bad in law.

12 The Authorised Representative for the Revenue, has submitted that it is not necessary to contest refund order as already SLP filed. There was no ground to review the Refund Sanction Order. Thus the Department had two choices (a) to issue SCN under Section 28 for recovery of wrongly sanctioned amount SCN or (b) to Review the Refund Sanction Order and file appeal. The Department chose the option (a). The same has been upheld by Hon'ble CESTAT in this Order

13 The Hon'ble CESTAT in para 52 of the Order states that "It also needs to be noticed that while both the importer and the Revenue can appeal to the Commissioner (Appeals) under section 128 of the Customs Act against an order of assessment or self assessment of a Bill of Entry, the proper officer has another option of issuing a show cause notice under section 28 of the Customs Act to demand and recover duties erroneously refunded." This has been stated in the judgements of Collector of Central Excise, Kanpur vs. Flock (India) Pvt. Ltd. 2002-TIOL-208-SC-CX M/s Priya Blue Industries Ltd. Vs. Commissioner - 2004-TIOL-78-SC-CUS, and in Hon'ble Supreme Court judgement in the case of ITC Limited vs. Commissioner of Customs,Kolkata, 2019 2019-TIOL-418-SC-CUS-LB. It was also held by same Division Bench of the Tribunal in M/s. Vivo Mobile India Pvt. Ltd. vs. Principal Commissioner of Customs 2024-TIOL-149-CESTAT-DEL that an assessment can be modified by resorting to section 28 or on an appeal.

14 The Hon'ble CESTAT in para 55 of the Order states that "The appellant is, therefore, not justified in asserting that the notice under section 28 of the Customs Act could not have been issued to the appellant claiming 'erroneously granted refund' as the only remedy available to the department was to challenge the refund order by filing an appeal before the Commissioner (Appeals).". Thus the submissions of the Learned counsel for the appellant that the refund sanctioning order dt. 28-09-2016 has not been challenged and it has already attained finality are set aside by Hon'ble CESTAT in this Order

15 TIME BAR :- The Authorised Representative for the Revenue has submitted that Any application for reassessment can be done (a) if before out of charge, then under section 17(5) or (b) if already out of charged, then under section 128(1) to file an appeal with Commissioner (Appeal) for reassessment of the assessment done on bill of entry but within 60 days from the date of communication of assessment order to the appellant [can be extended by Commissioner(Appeal) for 30 more days if application for such action is filed within a period of 60 days]. In the instant case the bills of entry were self-assessed by the importer and filed during the period from 07-10-2014 to 17-07-2015. They were given out of charge during the period from 09.10.2014 to 17-07-2015.The application for reassessment with Commissioners (Appeals) should have been filed within 60 days from 09.10.2014 to 17-07-2015. But the appellant has filed application for reassessment with Commissioner (Appeals) during the period on 17.12.2019. Thus the appeals are filed with a delay of 04 years 05 months.

16 APPELANT's PLEA UNDER LIMITATION ACT 1963 :- After receipt of judgment of the Supreme Court in in the case of ITC Limited vs. Commissioner of Customs, Kolkata, 2019-TIOL-418-SC-CUS-LB, the appellant filed 31 appeals before the Commissioner (Appeals) on 17.12.2019 under section 128(1) of the Customs Act together with an application under section 14 of the Limitation Act for exclusion of time for re-assessment of the 31 Bills of Entry. The Hon'ble CESTAT in this case heard at length and was deliberating whether the appellant is entitled to seek exclusion of time under section 14 of the Limitation Act 1963 or not as the Commissioner Appeal in his Order in Appeal has rejected the appeals on the ground of time limitation.

17 The Authorised Representative for the Revenue has submitted the following time lines

This time gap of five months is much larger than the of 60 days (extendable by another 30 days) prescribed in Section 128(1) of Customs Act 1962

18 The Hon'ble CESTAT in para 55 of the Order states that "The total time taken by the appellant from 18.07.2015 upto 25.09.2015 and then from 18.09.2019 to 17.12.2019 is much more than the maximum period of the 90 days contemplated under section 128 of the Customs Act"…... "Thus, even though the benefit of section 14 of the Limitation Act for exclusion of time period from 25.09.2015 upto 18.09.2019 would be available to the appellant, but still the 31 appeals would have to be dismissed as having been filed beyond the time period contemplated under section 128(1) of the Customs Act".

19 Thus the application under section 14 of the Limitation Act for exclusion of time for re-assessment of the 31 Bills of Entry is of no use to them.

20 APPLICATION FOR RE ASSESSMENT: In any refund, particularly refunds arising out of Hon'ble Supreme Court judgement in the matter of SRF Ltd, - 2015-TIOL-74-SC-CUS, the aspects to be verified are whether the Bills of entry are reassessed before filing refund, and whether un just enrichment is applicable. In the instant case, the party claimed the refund and the refund amount was initially rejected vide order dated 30-06-2016. But as per the judgement dt 05-09-2016 of Hon'ble High Court of Delhi the refund was sanctioned vide Order dt 27-09-2016. After the ITC judgement, the appellant felt the necessity of having the reassessment done and filed an application for reassessment of Bills of Entry which were self assessed by them. This has been done even though refund claim was sanctioned. The appellant instead of answering the SCN dt 26.09.2018, they are preferred to file appeal dt 17.12.2019 for re assessment. But important omissions were

(a) the application for re assessment should have been filed within 60 days from the date of communication of assessment order to the appellant (date of out of charge) as per section 128(1) of Customs Act 1962 but was filed very late

(b) the re assessment is pre-requisite for sanctioning Refund. But in the present case, the refund was sanctioned first vide order dt 28.09.2016 where as the application for re assessment was filed on 17.12.2019

21 Considering all the above the Hon'ble CESTAT has dismissed the Customs Appeal No's. 50510 of 2021 to 50540 of 2021 and upheld Order-in-Appeal No. CC(A)/Customs/D-I/Import/NCH/808-838/2020-21 dated 17.12.2020 passed by Commissioner of Customs (Appeals), New Delhi

22 The lessons learnt from this Final Order No. 55859-55891/2024 dated 04.06.2024 - 2024-TIOL-528-CESTAT-DEL are:

23 Lesson 4: Against any self assessed Bill of entry, the importer has to file application for assessment under section 128 of Customs Act 1962. Whereas for the Department, there are two options One, either to issue SCN against the assessment and the other to review the assessment and file an appeal.

24 Lesson 5: Any application for reassessment of self assessed Bill of Entry can be filed by Importers, if already out of charged, then under section 128(1) to file an appeal with Commissioner (Appeal) for reassessment of the assessment done on bill of entry but within 60 days from the date of communication of assessment order to the appellant [can be extended by Commissioner(Appeal) for 30 more days.]

(The views expressed are personal and not in official capacity)