Calcutta High Court
Commissioner Of Customs (Port) vs M/S. Vedanta Limited (Formerly Known As ... on 10 September, 2025
Author: T.S. Sivagnanam
Bench: T.S. Sivagnanam
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SPECIAL JURISDICTION (CUSTOMS)
ORIGINAL SIDE
HEARD ON : 02.09.2025
DELIVERED ON:10.09.2025
CORAM:
THE HON'BLE MR. CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE JUSTICE CHAITALI CHATTERJEE (DAS)
CUSTA NO. 14 OF 2025
WITH
I.A. NO. GA 1 OF 2025
COMMISSIONER OF CUSTOMS (PORT), KOLKATA
VERSUS
M/S. VEDANTA LIMITED (FORMERLY KNOWN AS SESA STERLITE
LIMITED/SESA GOA LIMITED)
Appearance:-
Mr. Bhaskar Prosad Banerjee, Adv.
Mr. Tapan Bhanja, Adv.
......For the Appellant
Mr. Rajeev Kumar Agarwal, Adv.
Mr. Sanjoy Dixit, Adv.
......For the Respondent
Page 1 of 50
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
JUDGMENT
(Judgment of the Court was delivered by T.S. Sivagnanam, CJ.)
1. This appeal has been filed by the Customs Department under Section
130 of the Customs Act, 1962 (the Act) challenging the order passed by the
Customs Excise and Service Tax Appellate Tribunal, Kolkata (the Tribunal)
in Customs Appeal No. 76391 of 2024 filed by the respondent herein dated
07.01.2024. The revenue has raised the following substantial questions of
law for consideration:
A. Whether the respondent can approbate
and reprobate at this point of time and
whether the learned Tribunal acted with
perversity, total non application of mind and
against the provisions of law, when the
respondent has itself prayed for refund by
filing application in prescribed form on
05.08.2022 and also accepted that they
have done a mistake in filing of the shipping
bills and consequently they have even
approached the Hon'ble Court for setting
aside the orders passed against them and
when as per the direction of the Hon'ble
Court such shipping bills have been rectified
then only the question of grant of refund
arises as on the date when the adjudicating
authority reassessed the shipping bills and
as such the order of the Learned Tribunal
cannot be sustained in law?
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
B. Whether the Learned Tribunal has gone
beyond its jurisdiction to award interest
@12% p.a w.e.f 11.01.2011 till 5/6.09.2023
when admittedly the amount of excess duty
to be refunded to the respondent only
crystallized on 05.09.2023 and when the
refund amount was crystallized as on
05.09.2023 then the corresponding
obligation to pay statutory interest will only
commence w.e.f. 06.12.2023 and as such,
the order of the learned Tribunal is against
the legal principles of law, perverse and in
violation of natural justice?
C. When the respondent has itself admitted
that there has been mistake on their part
while submitting the shipping bills to the
department and itself has applied for
correction and / or rectification in terms of
section 154 of the Customs Act, 1962 of the
shipping bills and when after a protracted
litigation when the same has been finalized
by the adjudicating authority as per the
order of the Hon'ble High Court as well as
the Learned Tribunal on 05.09.2023 then
whether the Learned Tribunal can award
interest from 11.01.2011 till 5/6.09.2023
for laches and negligence on the part of the
respondent?
D. Whether the respondent is at all entitled
for interest on delayed refund of duty when
immediately after the refund sanction order
dated 05.09.2023 passed by the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
adjudicating authority the department in
terms of section 27(2) of the Customs Act,
1962 has credited the excess amount of
duty of Rs.6,93,69,000/- in favour of the
respondent on 06.09.2023 (i.e. within one
day from the date of order) and as such
direction of the Learned Tribunal to pay
interest to the respondent @12% p.a w.e.f
11.01.2011 (i.e. after three months from
11.10.2010) till 5/6.09.2023 is contrary to
section 27 and 27A of the Customs Act,
1962?
E. Whether the order of the Learned
Tribunal is against the statutory
prescription and the legal position as
prescribed under section 27 and 27A of the
Customs Act, 1962 which stipulates the
manner and the mode of granting refund of
duty and also award of interest?
F. Whether the awarding of interest by the
Learned Tribunal @12% p.a w.e.f
11.01.2011 till 5/6.09.2023 is totally
beyond the prescribed statutory interest
@6% and the said order of the Learned
Tribunal is against the principles of law,
perverse and against the provisions of the
Customs Act, 1962?
G. Whether the order dated 07.01.2025
passed by the Learned Tribunal is in
violation of the principles of natural justice
and perverse inasmuch as the Learned
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
Tribunal has gone against the legal
principle and the statutory prescription as
prescribed under the Customs Act, 1962?
2. The facts leading to this appeal filed by the respondent before the
Tribunal are culled out as hereunder.
3. The respondent had filed 12 shipping bills during the period
05.06.2007 to 17.03.2008 for export of iron ore fines from Haldia Port. In
the export consignments the iron (Fe) content was declared as more than
62%. The respondent paid the custom duty as per the self-assessment made
which was accepted by the Department and the goods were cleared for the
purpose of export. When the exports are affected the duty payable was at
the rate of Rs. 300/- per metric ton. In terms of the exemption notification
No. 62 of 2007-Customs dated 03.05.2007 the export duty was fixed at Rs.
50/- per metric ton on iron ore fines having iron content 62% and below. In
respect of the 12 shipping bills filed by the respondent they had declared the
duty payable at Rs. 300/- per metric ton and this self-assessment was
accepted by the Department as they declared iron content was more than
62% in every consignment and the respondent had paid the duty
accordingly and the goods were allowed to be exported. After a lapse of more
than a year of the export shipment, the respondent vide letter dated 1st
October, 2009 requested the Assistant Commissioner of Customs, Export
Department, Customs House, Kolkata stating that certain errors have
occurred in respect of the iron content in the 12 shipping bills and sought
for rectification. By reply dated 04.06.2010, the Department informed the
respondent that there was no mistake either clerical or arithmetical in
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
respect of the assessment and the request made by the respondent cannot
be considered under Section 154 of the Act which provides for correction,
clerical errors etc. arising from any accidental slip or omissions. The
respondent challenged the said order before the Commissioner of Customs
(Appeals), Kolkata and the order dated passed by the Deputy Commissioner
of Customs (Exports) dated 04.06.2010 was set aside and the said authority
was directed to dispose of the representation to determine whether the case
of the respondent fits in as errors "arising out of omission". The Assistant
Commissioner of Customs by order dated 11.05.2015 rejected the request
for rectification of error in respect of the 12 shipping bills. Aggrieved by such
order dated 11.05.2015 the respondent preferred appeal before the appellate
authority and the appeal was rejected by order dated 13.05.2016. The
respondent challenged the said order before the learned Tribunal by
preferring an appeal and the learned Tribunal by order dated 28.07.2022 set
aside the order passed by the appellate authority dated 13.05.2016 and the
appeal was allowed by way of remand to the original authority with a
direction to pass a speaking order, finalizing the assessment. Direction was
issued that relief as per notification No. 62/2007-Cus dated 03.05.2007 be
given taking into account the test reports; those consequential benefits, if
any, be given to the respondent as per law. The respondent filed an
application on 05.08.2007 in Form No. 102 which is a statutory format for
filing an application for refund and they claim a sum of Rs. 6,93,69,000/- is
liable to be refunded. The respondent also requested for implementation of
the order passed by the learned Tribunal dated 28.07.2022. By order dated
05.01.2023, the original authority rejected the refund claim. Aggrieved by
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
the order passed by the learned Tribunal dated 28.07.2022, the appellant
department filed appeal before this court in CUSTA No. 2 of 2023. In the
meantime, the respondent also filed a writ petition before this Court in WPO
636 of 2023 challenging the order dated 05.01.2023 rejecting the
application for refund. The appeal filed by the department before this Court
in CUSTA No. 2 of 2023 was dismissed by order dated 28.06.2023. The writ
petition filed by the respondent in WPO 636 of 2023 was disposed of by
setting aside the order rejecting the refund application dated 05.01.2023
and remanding the matter back to the adjudicating authority to implement
the order of the Tribunal dated 28.07.2022 within a timeframe by passing a
reasoned and speaking order after giving opportunity of hearing to the
petitioner or its representative. Pursuant to the directions issued in the writ
petition as well as the directions issued by the Tribunal the Assistant
Commissioner of Customs (Exports) by order dated 05.09.2023 reassessed
the 12 shipping bills and extended the benefit of the Notification No.
6/2007-Customs dated 03.05.2007 and refunded the excess amount paid
by the respondent, by sanctioning a refund of Rs. 6,93,69,000/-. After the
order dated 05.09.2023 passed by the adjudicating authority the
Department on 06.09.2023 refunded the excess duty to the respondent
through online bank transfer. Subsequently, the respondents submitted a
letter dated 13.09.2023 for payment of interest alleging that interest is
payable on account of the delay in effecting refund. The Assistant
Commissioner of Customs (Exports) by order dated 27.11.2023 rejected the
claim for interest holding that the reassessment of the shipping bills and the
subsequent refund of the excess export duty has been completed within 8
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
weeks from the date of the order of this Court and there is no delay in
sanctioning the claim and, therefore, no interest is payable in terms of the
provisions of Section 27A of the Act. The respondent challenged the said
order by filing an appeal before the Commissioner of Customs (Appeals). The
appellate authority by order dated 18.07.2024 remanded the matter to the
original authority for compliance of the direction issued by this court as well
as the learned Tribunal. The appellate authority opined that the prescribed
time limit for sanctioning the interest on delayed refunds might be
computed in terms of the order passed by the learned Tribunal dated
28.07.2024. Aggrieved by such order dated 18.07.2024, the respondent
preferred appeal before the learned Tribunal. The learned Tribunal by order
dated 07.01.2025 directed the appellant Department to pay interest to the
respondent at the rate of 12% per annum and that the interest is payable
from 11.01.2011 till 5/6. 9.2023 when the amount was finally paid by the
respondent, time frame was fixed for compliance. This order dated
07.01.2025 is impugned in this appeal.
4. The contention of the appellant Department is that the finding of the
Tribunal fixing the date from which the interest is payable is erroneous as
subsequent order of the appellate authority dated 13.05.2016 affirmed the
order of the adjudicating authority which had again declined the
rectification of the shipping bills. Learned Tribunal on 28.07.2022 set aside
the order of the appellate authority dated 13.05.2016 and remanded the
matter back to the original authority and upon such remand the original
authority rejected the claim of refund by order dated 05.01.2023.
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
Furthermore, the learned Tribunal by order dated 20th July, 2022 remanded
the matter back to the original authority. Thus, it is submitted that on a
cumulative reading of all these orders it is seen that there was no direction
to effect refund of the alleged amount to the respondent but the matter was
remanded back to the original authority for passing appropriate orders. The
original authority by order dated 5th September, 2023 reassessed all the 12
shipping bills which were from June, 2007 to March, 2008 and it is
submitted that the date of the respective shipping bills are very relevant
since the correction/amendment sought by the respondent related to
shipping bills filed on various dates and the respondent cannot be heard to
say that they have made wrong declarations on various shipping bills on
various dates and realized their mistake only on 1st of October, 2009 which
is more than one year after the filing of the shipping bills and the exports
had already been effected. Therefore, it is contended that the issue as to
whether for the fault on the part of the respondent or whether the appellant
Department is liable to pay interest on the alleged outstanding sum from
11.01.2011 when the amount to be paid back to the respondent did not
crystalize or in other words become payable. It is submitted this aspect of
the matter has been totally ignored by the learned Tribunal. Further, it is
submitted that the finding rendered by the learned Tribunal that the
respondent is not required to file this statutory form No. 102 for refund is an
erroneous finding, as there is no other procedure under the Customs Act to
claim refund except by way of filing the statutory form. Furthermore, the
finding rendered by the learned Tribunal with regard to the order of the
Commissioner of Customs (Appeals) dated 06.10.2010 is erroneous, as the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
Department never accepted such order, and as such the Tribunal cannot
compel the Department to accept the order dated 06.10.2010 to be
construed as a rectification order more particularly when by the said order
dated 06.10.2010 the matter again stood remanded to the original authority
for appropriate decision. Therefore, it is submitted that the order of open
remand cannot be construed as a mandate of the correction/ amendment of
the shipping bills.
5. It is further submitted that the learned tribunal without any factual
basis held that 11.10.2010 should be the date on which consequential
refund would accrue and that the revenue could have completed the
rectification/reassessment within three months from 11.10.2010 and after
allowing three months from 11.10.2010, the interest will be payable from
11.01.2011. According to the revenue, this finding of the learned tribunal is
on the basis of assumptions and presumptions. Furthermore, the tribunal
ought to have noted that the respondent filed refund application on
05.08.2022 along with that letter and that should be taken to be the
relevant date as statutory form was submitted only on 05.08.2022. The
adjudicating authority sanctioned refund on 05.09.2023 after reassessment
of the shipping bills and also granted the refund to the respondent.
6. It is further submitted that in the earlier round of litigation, the
learned tribunal or this Hon'ble Court did not sanction refund, did not
reassess the shipping bills and all the decision making process has been left
open before the adjudicating authority which has undertaken the same on
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
05.09.2023. That the learned tribunal erred in preponing the sanction order
from 05.09.2023 to 11.10.2010 which is against the law, contrary to the
facts and circumstances of the case. Furthermore, the learned tribunal
grossly erred in coming to a conclusion that the respondent was not
required to file the refund application in the statutory format ignoring that
the statute mandates a person claiming refund to do so. Furthermore, the
tribunal ought to have noted that it has been admitted from the records that
no provisional assessment was done by drawing representative samples of
the goods or obtaining bonds with security or surety. The declaration
submitted by the respondent was taken, assessment was done by the proper
officer by levy of normal rate of duty on the declared weight inclusive of
moisture and the same was accepted by the respondent and the duty was
paid. The respondent had at no point of time raised any objections and all
the documents called for by the department were submitted. Furthermore,
the learned tribunal ought to have noted that the adjudicating authority
categorically held that there was no provisional assessment on the shipping
bills since no dispute was raised by the respondent with regard to the
applicable rate of duty at the time of assessment of the shipping bills which
were in fact, self-assessed by the respondent by mentioning the weight of
the goods. The refund application dated 05.08.2022 was disposed by in
terms of the order passed by this court dated 06.07.2023 by sanctioning
refund.
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
7. It is further reiterated that in terms of Section 27 of the Customs Act,
it is mandatory for filing an application for refund in the statutory form and
such application has to be made before the expiry of one year from the date
of payment of such duty or interest and the limitation shall not apply if the
duty or interest has been paid under protest. The learned tribunal erred in
not considering the period of limitation more particularly, taking note of the
sequence of events and interest ought not to have been directed to be paid to
the respondent on the facts of the case and also in the light of the statutory
mandate. It is submitted that the respondent contented that the amount
paid by them to the department is a deposit and not payment and the
department retained the money without authority of law. In this regard, it is
submitted that the respondent cannot disown their own conduct in filing the
refund application in the prescribed statutory format and cannot disown the
admission made by them in various letters written to the department.
Therefore, the respondent cannot approbate and reprobate and the
principles of res judicata and estoppel would apply to the case of the
respondent. Therefore, the finding of the learned tribunal that what was
paid by the respondent is a deposit is wholly erroneous.
8. In support of their contention, the appellant placed reliance on the
decision of the Hon'ble Supreme Court in ITC Limited Versus
Commissioner of Central Excise, Kolkata IV 1 wherein the Hon'ble
Supreme Court held that refund is more or less in the nature of execution
proceedings and it is not open to the authority which process the refund to
(2019) 368 ELT 216 (SC)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
make a fresh assessment on merits and to correct assessment on the basis
of mistake or otherwise. It was further held that the claim for refund cannot
be entertained unless the order of assessment or self-assessment is modified
in accordance with law by taking recourse to appropriate proceedings and it
would not be within the power under Section 27 of the Act to set aside the
order of self-assessment and reassess the duty for making refund. It is
reiterated that in the instant case, initial assessment was not a provisional
assessment but a final assessment which was accepted by the respondent
and duty was paid and the goods were permitted to be exported and such
order of assessment binds not only the respondent but the department as
well and unless the said assessment is modified in accordance with law, the
refund sanctioning authority cannot sit in appeal over the said assessment.
Thus, it is submitted that after protracted litigation when the bills of entry
were reassessed in terms of Section 154 of the Act and upon the amount
being crystalized the same was immediately refunded to the respondent and
the question of payment of interests does not and cannot arise.
9. The learned advocate appearing for the respondent submitted that the
respondent in all the shipping bills indicated the iron content to be 63.5%
DMT with moisture content of 9% approximate which would be less than
62% in weight metric tonne (WMT) on which the export duty of Rs. 50 per
metric tonne would be legally payable. The assesse submitted all relevant
documents to establish that export duty of Rs. 50 PMT was payable and this
was mentioned in their letter dated 18.05.2009 which was submitted to the
department on 26.05.2009. In the said letter, reference was made to the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
decision of the Hon'ble Supreme Court in Union of India Versus
Gangadhar Narsingdas Agarwal 2 and also in the assesses own case in
order in appeal dated 18.09.2008 passed by the Commissioner of Customs
(Appeals), Kolkata. Further the respondent stated that since the issue is
already settled by the Hon'ble Supreme Court in the aforementioned
decision and the shipping bills having been assessed without taking note of
the decision, the authority was empowered to make rectification of error in
assessment by taking recourse under Section 154 of the Act. Since no
response was received, the respondent submitted another letter dated
07.12.2009 and also a further representation to the Commissioner of
Customs vide a letter dated 15.02.2010. The learned advocate appearing for
the respondent referred to the other facts, the various order passed by the
authorities, by the tribunal and this court which we have elaborately set out
in the preceding paragraphs.
10. It is submitted that the authorities have consistently defied the
order of the appellate authority depriving the respondent of its legitimate
refund of excess deposit amount for more than 14 years by denying
rectification under Section 154 of the Act. In spite of the direction issued by
the Commissioner of Customs (Appeals) vide order dated 11.10.2010, the
authorities did not comply with the direction for more than four and a half
years and thereafter by order dated 11.05.2015 proceeded to examine the
issue afresh beyond the remand direction and denied rectification. Placing
reliance on the decision of the High Court of Bombay in Dimension Data
(1986) 26 ELT 918 (Del)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
India Private Limited Versus Commissioner of Customs and Others 3, it
is submitted that in the said decision, it was held that Section 17 of the Act
cast duty on the proper officer to verify and examine the assessment and
that Section 149 read with Section 154 provides for rectification of error or
omission. After taking note of the decision of the Hon'ble Supreme Court in
ITC Limited (supra), it was observed that there is no statutory requirements
to prefer appeal in such cases and the decision of the Bombay High Court
was approved by the Hon'ble Supreme Court reported in 2022 (379) ELT A
39 (SC). Similar view was taken by the High Court for the State of Telangana
in Sony India Private Limited Versus Union of India 4. Further the
department was conscious of the fact that assessment was required to be
done on weight metric tonne (WMT) basis and in spite of the same, the
adjudicating authority rejected the claim for refund inline with its earlier
order dated 04.06.2010 ignoring the appellate order and similar order was
passed on 05.01.2023 which is third round of litigation. Further, it is
submitted that the excess amount that remained with the revenue is
"deposit" and not "duty paid" and therefore, Section 27 and 27A of the Act
are inapplicable. Reliance was placed on the decision of the High Court of
Bombay in Keshari Steels Versus Collector of Customs, Bombay 5
wherein it was held that when amount was paid in excess due to error
which could be rectified under Section 154, there is no applicability of
Section 27 and the limitation period therein is not applicable. The special
leave petition filed against the said decision was dismissed on the ground of
(2021) 376 ELT 192 (Bom)
(2021) 129 Taxmann.com 251 (Tel)
(2000) 115 ELT 320 (Bom)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
delay as well as on the merits and reported in 2000 121 ELT A139 (SC).
The decision in Keshari Steel was followed by the High Court of Karnataka
in DHL Express India Private Limited Versus The Commissioner of
Service Tax, Bengaluru Service Tax-I 6. Further by placing reliance on the
decision in Commissioner of Central Excise (Appeal), Bangalore Versus
KVR Construction 7, it is submitted that the amount was paid erroneously
the same would not be a duty or tax and Section 11B of the Central Excise
Act which is pari materia to Section 27 of the Customs Act will not apply.
The said decision was followed by the High Court for the State of Telangana
in Vasudha Bommireddy Versus Assistant Commissioner of Sales Tax,
Hyderabad 8.
11. With regard to the rate of interest, it is submitted that the High
Court of Allahabad in EBIZ.Com Private Limited Versus Commissioner of
Central Excise, Customs 9 held the assesse was entitled to interest at 12%.
Similar rate of interest was awarded in the case of Commissioner of
Central Excise, Panchkula Versus Riba Textiles Limited 10 wherein the
decision of the Hon'ble Supreme Court in Sandvik Asia Limited Versus
Commissioner of Income Tax- I, Pune, 11 was relied on.
(2021) 377 ELT 594 (Kar)
(2012) 26 STR 195 (Kar)
(2020) 35 GSTL 52 (Tel)
(2017) 49 STR 389 (All)
(2022) 62 GSTL 136 (P&H)
(2006) 150 Taxmann 591 (SC)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
12. It is submitted that similar rate of interest was granted in the case of
Reliance Transport and Travel Private Limited Versus Union of India
12 which decision was followed in Rachana Garments Private Limited
Versus Commissioner of Customs, (Preventive), Mumbai 13, it is
submitted that with regard to the contention of the revenue that the
refundable amount crystalized only in 2023 when refund was sanctioned
vide order dated 05.09.2023 must be examined in the light of the facts of the
instant case where in complete defiance of the principle of judicial discipline,
the determination of refund amount was inordinately delayed for 14 years
without any reasonable cause. In this regard, the learned advocate
reiterated the various orders passed by the adjudicating authority, the
appellate authority as well as the tribunal at this court.
13. Further it is submitted that in CUSTA 2 of 2023 filed by the
department at the time of hearing the revenue pleaded that the appeal has
become infructuous as the original authority has passed the order dated
05.01.2023 but the department contested the legal issue of applicability of
Section 154 of the Act. The Division Bench vide order dated 28.06.2023 held
that the authority having accepted the order of remand passed by the
appellate authority on the first occasion, it is too late to take such a plea at
an advanced stage of litigation which is practically the second round of
litigation though commenced from the original cause. Further in the said
case, the arguments of the revenue on self-assessment by the respondent
(2022) 62 GSTL 33 (Bom)
(2022) 1 Centax 190 (Bom)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
under Section 17 was also considered and the Division Bench held that
reliance placed on Section 17 is misplaced as the said section has
undergone a radical change with effect from 08.04.2011 whereas the exports
pertain to period prior to 2011. With this reasoning the appeal filed by the
revenue was dismissed observing that no substantial questions of law arose.
14. Reliance was also placed on the decision of the Hon'ble Supreme
Court in Union of India Versus Kamlkashi Finance Corporation Limited
14. Further it is contended that the department cannot place any reliance on
the statutory rate of interests at 6% considering the facts and circumstances
of the case and in as much as the revenue withheld the amount for 14 years
and at best, the same can be considered to be "deposit" and not "duty paid".
Therefore, the learned tribunal was fully justified in directing the payment of
interests at 12%. In this regard, reliance was placed on the decision in
Sandvik Asia Limited (supra), Commissioner of Income Tax Versus
Gujarat Fluoro Chemicals 15 which clarified the decision in Sandvik Asia
Limited and the decision in Union of India Versus Willowood Chemicals
Private Limited 16. Reliance was also placed on the decision of this Court in
Dulichand Shreelal Versus Collector of Central Excise and Others 17
and Parimal Ray and Others Versus The Commissioner of Customs
(Port), Customs House and Others 18 wherein it was held that the duty
which was paid under mistake was legally not payable, which could not be
(1991) 55 ELT 433 (SC)
(2014) 14 Taxmann.com 1 (SC)
(2022) 60 GSTL 3 (SC)
(1987) 32 ELT 388 (Kol)
(2015) 318 ELT 379 (Kol)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
retained by the revenue and the same cannot be considered to be "duty" and
thus the limitation prescribed in Section 27 of the Act/Section 11B of the
Central Excise Act cannot be made applicable. With the above submissions,
the learned advocates prayed for dismissal of the appeal.
15. In reply, the learned Senior Standing Counsel appearing for the
department sought to distinguish the decision relied on by the respondent
before learned tribunal as well as before this Court. It is submitted that the
decision in Union of India Versus Aluminium Industries Limited 19 is not
applicable to the case on hand as in the said case the error resulting in
charging of lesser duty due to the omission to a new rate of duty is error
rectifiable under Section 154 of the Act. It is submitted that in the present
case, the assessing officer assessed the shipping bills acting on the
respondent's own declaration and the respondent paid the duty voluntarily.
It is further submitted that the decision in Ranbaxy Laboratories Limited
Versus Union of India and others 20 is not applicable to the case on hand
as in the said case, the issue involved was whether liability of the revenue to
pay interest under Section 11BB of the Act, commences from the date of
expiry of three months from the date of receipt of application for refund or
on expiry of period from the date on which the order of refund is made.
While deciding such issue, the Hon'ble Supreme Court held that liability of
the revenue to pay interest under Section 11BB commences from the date of
expiry of three months from the date of receipt of application for refund
(1996) 83 ELT 41 (Ker)
(2011) 11 GSTR 321 (SC)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
under Section 11B(1) of the Act and not on the expiry of the said period from
the date on which the order of refund is made. It is submitted that in the
instant case the application for refund under Section 27 of the Act was filed
by the respondent in the prescribed statutory format only on 05.08.2022
and pursuant to the orders passed by the tribunal as well as by this court
while reassessing the shipping bills a communication was issued by the
department dated 17.08.2023 calling upon the respondent to submit all
connected documents and the respondent in response submitted the
required documents and immediately thereafter the adjudicating authority
sanctioned the refund on 05.09.2023 and the same was paid to the
respondent on 06.09.2023 and therefore, the question of payment of
interests does not arise.
16. It is submitted that the decision in Sandvik Asia Limited will not
apply to the respondent's case as in the case on hand the assessing officer
assessed the shipping bills based on the respondent own declaration and
the duty was paid by the respondent voluntarily to get goods cleared for
export. Therefore, the inaction and/or omission on the part of the
respondent cannot be shifted to the department. It is further submitted that
the decision in Riba Textiles and EBIZ.Com Private Limited are not
applicable to the cases on hand as in those case the issue was whether
interest was payable when the amount/duty was paid/deposited during
investigation and adjudication and at the time of entertaining the stay
application or payment made involuntarily under threat of arrest during
investigation. These decision are factually distinguishable.
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
17. In Commission of Central Excise, Hyderabad Versus ITC Limited
21, the Hon'ble Supreme Court directed the payment of interests on delayed
refund of pre-deposit, at 12% per annum from three months after disposal
of the dispute between the parties, however in the instant case it is not the
case of pre-deposit, rather voluntarily payment of duty. In Sony India, the
facts pertain to amendment of bill of entry under Section 149 of the Act and
the High Court for the State of Telangana held that Section 149 does not
prescribe any time limit for amending the bill of entry filed and assessed. In
the instant case, the bill of entry were assessed by the proper officer as per
the declaration of the respondent and there is no omission on the part of the
assessing officer moreover, the respondent has paid the duty on such
assessment which has been accepted by the department.
18. The decision in Keshari Steels is also distinguishable on facts as in
the said case there was excess recovery by the department and the
petitioner therein made an application for refund on account of error in
calculation. In Gujarat Fluoro Chemicals the case pertains to inordinate
delay on the part of revenue refunding certain amount which included
statutory interest and it was ordered that the revenue has to pay
compensation for the same and not the interest on interest. It is submitted
that in the case on hand once the amount was crystalized upon the re-
assessment of the bills of entry, in terms of the Section 154 of the Act, the
amount was refunded immediately and the question of payment of interest
does not arise. It is further submitted that the decision on the Willowood
(2005) 179 ELT 15 (SC)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
Chemicals Private Limited arose out of an writ petition filed for payment of
interest on delayed refund which was held to be maintainable and it was
also held that the case has to be decided purely in the light of the concerned
statutory provisions and in the light of the statute and the respondent
therein was held to be entitled to interest at the rate of 6% per annum only.
It is further submitted that the decision in Reliance Transport and Travel
Private Limited is also not applicable to the case on hand since in the said
case it pertains to the amount deposited during the investigation. In the
case of Rachana Garments Private Limited, it pertain to delay in
adjudication of the show cause notice for 25 years which was held to be in
contravention of procedural fairness and therefore, therein was held to be
entitled to be refund of the amount deposited in the course of investigation
with 12% interest per annum from the date of deposit upto the date of
refund. With the above submissions, the learned advocate appearing for the
appellant prayed for allowing the appeal, setting aside the order passed by
the learned tribunal and answering the substantial questions of law in
favour of the revenue.
19. We have elaborately heard Mr. Bhaskar Prosad Banerjee, learned
Senior Standing Counsel and Mr. Tapan Bhanja, learned Standing Counsel
for the appellant Department and Mr. Rajeev Kumar Agarwal, learned
Advocate assisted by Mr. Sanjay Dikshit, learned Advocate appearing for the
respondent.
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
20. The issue which falls for consideration is whether the respondent was
entitled to interest on the amount refunded to them and if they are so
entitled from what date the interests is payable and at what percentage.
21. Section 27 of the Customs Act, 1962 (the Act) deals with claim for
refund of duty. Sub Section (1) states that any person claiming refund of
any duty or interest (a) paid by him; or (b) borne by him; may make an
application in such form and manner as may be prescribed for such refund
to the Assistant Commissioner of Customs or the Deputy Commissioner of
Customs before expiry of one year from the date of payment of such duty or
interest. Thus, it is seen that time frame has been prescribed under the
statute for making an application in such form and manner as may be
prescribed for refund. Therefore, the court even in exercise of its powers
under Article 226 of the Constitution cannot direct the authorities to do
something which is not provided in the statute.
22. Furthermore, Section 27(1) prescribed the procedure for claiming
refund and also provides the period within which refund should be sought
for and it does not speak about as to whether refund is permissible or the
ground on which the refund could be sought. Thus on a plain reading of the
Section 27, it is amply clear that refund if any arising under the Act are
regulated by the provisions of Section 27 and the intention of the legislature
does not envisage any refund except in accordance with the procedure
prescribed thereunder. Equally, there is no question of application of any
other law to enable the Customs authorities to consider the claim for refund
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
of duty. That apart, Section 27(1) also prescribes the authorities before
whom the refund application has to be made in such form and manner as
may be prescribed and those authorities being the Assistant Commissioner
of Customs or Deputy Commissioner of Customs and therefore this court is
of the view that there cannot be an order for refund without an application
and such an application has to be made within the time prescribed under
the statute. Assuming for the sake of argument, the direction issued by the
court in a writ petition holding that the assesse therein is entitled to refund
of duty paid which according to the court was retained by the department
without the authority of law, even if such direction is issued the assessee
has to make an application in such form and manner as may be prescribed
before the appropriate authority who will then proceed to comply with the
direction issued by the court. Therefore, we are unable to persuade
ourselves to agree with the findings of the learned tribunal that the formal
form 102 filed by the respondent along with the covering letter is not
required to be filed since the refund is only consequential action after the
rectification is carried out. This finding virtually negates the statutory
provisions namely Section 27(1) of the Act and therefore has to be held to be
erroneous finding.
23. Having held that the refund claim cannot be processed without the
application in the statutory form, it is required to be seen as to how such a
form should be processed by the prescribed authority. In Sandvik Asia
Limited, it was held that the award of interest on the refunded amount is
per statutory provisions of the law as it stood and on the peculiar facts and
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
circumstances of each case. It was further held that a specific provision has
been made under the statute, such provision has to govern the plea and
therefore the court has to take all relevant factors into consideration while
awarding the rate of interest on the compensation.
24. Therefore, two things have to be borne in mind namely the statutory
provisions and the facts of the case on hand to determine the issue as to
whether the respondent would be entitled to payment of interest and if the
question is answered in the affirmative then the date from which he is
entitled for interest and the rate of interest.
25. While on this issue, we take note of the Section 27A of the Act which
deals with interest on delayed refund. It states that if any duty ordered to be
refunded under Sub Section (2) of Section 27 to an applicant is not refunded
within three months from the date of receipt of the application under Sub
Section (1) of Section 2, there shall be paid to the applicant interest at such
rate not below 5% not exceeding 30% as is for the time being fixed by the
Central Government by notification in the official gazette, on such duty from
the date immediately after the expiry of three months from the date of
receipt of such application till the date of refund of such duty. The
explanation states that where any order of refund made by the
Commissioner (Appeals) the appellate tribunal or any court against the
order of Assistant Commissioner of Customs or Deputy Commissioner of
Customs under Sub Section (2) of Section 27, the order passed by the
Commissioner (Appeals), the appellate tribunal or as the case may be, by the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
court shall be deemed to be an order passed under that Sub Section for the
purpose of Section 27A. Thus, the language used in the explanation in
Section 27A of the Act also covers the case where the order passed by the
Assistant Commissioner of Customs or the Deputy Commissioner of
Customs under Section 27(2) of the Act is challenged before the appellate
authority or the tribunal or the court and the order passed either by the
appellate authority or by the tribunal or by the court, the same shall be
deemed to an order passed under Sub Section (2) of Section 27 for the
purpose of Section 27A.
26. The Customs Act is an Act to consolidate and amend the law relating
to customs. The Act aims to sternly or expeditiously deal with smuggled
goods and curbs the dent on revenue thus caused. The Act provides for
confiscation of goods and conveyance and imposition of penalties where any
goods which are imported contrary to any prohibition imposed or under the
Act or any other law for the time being enforced. This is the object and the
scheme of the Act as explained by the Hon'ble Supreme Court in
Commissioner of Customs (Preventive), Mumbai Versus M. Ambalal and
Company 22.
27. Section 27A was inserted by the Act 22 of the 1955 with effect from
26.05.1995, till insertion of Section 27A there was no statutory right to
claim payment of interest on delayed under the Act and it is only after the
insertion this statutory provision was incorporated in the statute. Thus, a
(2011) 2 SCC 74
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
combined reading of Section 27(1)and (2) and the explanation in Section 27A
manifest that any person claiming refund of the duty or interest paid by him
or payment by him is required to make an application in such form and
manner as may be prescribed for such refund to the authority which has
been specified namely the Assistant Commissioner of Customs or Deputy
Commissioner of Customs within the time stipulated under the statute. On
compliance with these requirement under Sub Section (1) of Section 27 in
terms of Sub Section (2) of Section 27, the Assistant Commissioner of
Customs or Deputy Commissioner of Customs is satisfied that the whole or
any part of the duty and interest, if any, paid on such duty paid by the
applicant is refundable, he may make an order accordingly and the amount
so determined shall be credited to the fund. In terms of the proviso, instead
of the amount being credited to the fund it will be paid to the applicant if
such amount relates to anyone of the payment as contained in Clauses (a) to
(g) in Sub Section (2) of Section 27 of the Act.
28. Bearing in mind, the scheme of the Section 27(1)(2) if read along with
the explanation in Section 27A of the Act, the date of effecting refund gets
postponed in cases where order have been passed by the Commissioner
(Appeals) or the appellate tribunal or the court. Such circumstances would
arise if the authority namely the Assistant Commissioner of Customs or the
Deputy Commissioner of Customs rejects an application for refund filed
under Section 27(1) in such form and such manner as may be prescribed
within the time limit and the assessee carries the matter on appeal before
the Commissioner (Appeals) and when he is unsuccessful before the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
tribunal carries the matter on appeal to the High Court and in the event of
he succeeding in such appeal and held to be entitled to a refund such order
passed by the Court or the tribunal or the Commissioner of Appeals as the
case may be shall be deemed to be order passed under Sub Section (2) of
Section 27 for the purpose of Section 27A of the Act. In such circumstances,
the right to claim interest under Section 27A of the Act shall be from the
date immediately after the expiry of three months from the date of receipt of
such application (in terms of Section 27(1) till the date of refund of such
duty.
29. The above understanding of the law is required to be applied to the
facts and circumstances of the case. The tribunal has elaborately referred to
all earlier proceedings and in paragraph 37 as set out the factual matrix in a
tabulated form and what is conspicously missing is that the date on which
the application for refund was submitted by the respondent which has been
omitted to be mentioned. It is admitted fact that the respondent submitted
the application for refund only on 05.08.2022. The tribunal was conscious
of this fact, yet it proceeds to hold that there is no necessity for filing such
an application which in the preceding paragraphs, we had held to be
erroneous finding. The Act provides for a hierarchy of remedies. The
assessee as well as the department are entitled to avail those remedies. No
person can be faulted or penalized for availing an appellate remedy or
preferring an appeal before the tribunal or the court of law. The mistake
committed by the learned tribunal is precisely on this issue by finding fault
with the department while passing orders of rejection of request for
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
rectification made under Section 154 of the Act. The department cannot be
prevented from raising their contentions both legal and factual. The
consistent case of the department till date of grant of refund by order dated
05.09.2023 is that the request made by the respondent cannot be processed
under Section 154 of the Act. In law, if the department is entitled to take
such stand, they cannot be penalized for doing so and availing the hierarchy
of remedies and though ultimately, they were unsuccessful the time spent
while exercising the statutory remedies available cannot be rekoned and put
against the department alleging inordinate delay.
30. The department is right in contending that the amount of refund got
crystalized for the first time only after Order-in-Original dated 05.09.2023
was passed. Prior to that neither the order of the Commissioner of Appeals
nor the tribunal nor the court quantified the amount or crystalized the
amount of refund to which the respondent was entitled to. Therefore to
allege that the department had slept over the matter is a wrong conclusion
considering the facts and circumstances of the case. As could be seen from
the dates and events filed by the learned advocates of both sides, it is seen
that the department had been consistent in its stand that the request made
by the respondent cannot be entertained under Section 154 of the Act. The
department is entitled to raise legal and factual contention as the statute
provides for such avenue. Ultimately, the matter was put to rest after the
appeal filed by the revenue was dismissed challenging the order passed by
the tribunal and there was a direction issued in writ proceeding and
ultimately the application for refund dated 05.08.2022 was processed under
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
Sub Section (2) of Section 27 order was passed on 05.09.2023 and on
06.09.2023. Refund was paid to the respondent. This payment being well
within time permitted no interest is payable to the appellant. The learned
tribunal erred in shifting the date from which the respondent would be
entitled to interest to a date much prior to the application for refund was
made in terms of Section 27(1) of the Act which was made only on
05.08.2022 and therefore the award of interest from 11.01.2011 is not
sustainable.
31. As pointed out earlier that the learned tribunal was conscious of the
fact that the respondent had filed the application for refund in the statutory
form No. 102 which it held is not required to be filed which is a erroneous
finding. Not stopping with that, the learned tribunal holds that the appellant
letter dated 18.05.2009 submitted to the department on 26.05.2009 attains
the final status of a refund claiming letter. This finding is wholly erroneous
as it seeks to rewrite the statutory provisions namely Section 27(1) of the
Act, such finding is set aside. One other fact which we are required to taken
note is as to what is the date on which the finding was rendered in favour of
the respondent that erroneously excess export duty was collected. Before we
answer this issue we consider the submissions made by the learned
advocate appearing for the respondent that the amount of excess export
duty paid by the respondent was a deposit not a payment. This submission
has to be outrightly rejected on the facts and circumstances of the case on
hand. The respondent had filed 12 shipping bills ranging from 05.06.2007 to
17.03.2008. They would contend that they made a wrong declaration with
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
regard to the iron content that too after more than one year after the
shipping bills were assessed, duty paid and exports effected. Though much
could be said on the conduct of the respondent, we are precluded from doing
so since the order of refund has already been passed by the authority.
Nonetheless the conduct of the respondent also has to be borne in mind.
The delay as to why they submitted a letter for rectification only on during
October 2009 is not forthcominig. The respondent contended that the bills of
entry were provisionally assessed and what was paid by them is not
payment but a deposit. This submission is contrary to the facts as the bills
of entry were self-assessed and such assessment was accepted by the
department and based on such assessment duty was computed, the same
was voluntarily paid by the respondent and the goods were permitted to be
exported. Therefore, it would be too late in the day for the respondent to
contend that the assessment of the bills of entry at the first instance was a
provisional assessment. Furthermore, the respondent cannot dispute the
fact that they deposited the export duty voluntarily and not under protest
nor claimed the benefit of notification No. 62/2007 dated 03.05.2007. The
question of provisional assessment would come in when contingency as
mentioned in Section 18 of the Act arise. Section 18 of the Act deals with
provisional assessment and Sub Section (1) commences with a non obstante
clause stating that notwithstanding anything contained in the Act without
prejudice to the provisions contained in Section 46 the proper officer may
direct the duty leviable on such goods be assessed provisionally under the
circumstances mentioned in Clauses (a), (b) and (c) if the importer or the
exporter as the case may be furnishes such security as the proper officer
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
deems fit for the payment of deficiency if any between the duty finally
assessed and the duty provisionally assessed. Therefore, the provisional
assessment is permissible only when the three circumstances mentioned in
Sub Section (1) of Section 18(1) (as it stood then) are attracted. Therefore,
the theory as propounded by the respondent that the assessment made at
the first instance was a provisional assessment is outrightly rejected.
32. We are also prompted to examine as to what would fall within the
scope of Section 154 of the Act which deals with correction/clerical errors
etc. Section 154 states that clericals or arithmetical mistake in any decision
or order passed by the Central Government, the Board or any Officer of
Customs under the Act, or errors arising therein from accidental slip or
omission made, at any time to be corrected by the Central Government the
Board or such officer of Customs or successor in office of such officer as the
case may be. The respondent would contend that the proper officer
committed a mistake in not calcuting the duty by applying the law laid down
by the Hon'ble Supreme Court in Gangadhar Narsingdas Agarwal, rather
it is the respondent who is to be blamed and held responsible since it is they
who self-assessed the bills of entry mentioning the iron content etc. which
was accepted by the department. However, we do not wish to render any
opinion on this ground as already the order has been passed in favour of the
respondent granting refund and refund is also been effected on 06.09.2023.
33. It is worth reiterating that there was no dispute regarding the
applicable rate of duty at any point of time during the assessment of the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
shipping bills and the respondent did not raise any objection on the rate of
duty as assessed by the proper officer as per the weight mentioned by the
respondent and they agreed with the assessment, paid the duty and the
goods were permitted to be exported. It is also not in dispute that there was
no provisional assessment by the proper officer and no representative
samples was drawn for analysis at the authorized laboratory. The
respondent had filed WPO 636 of 2023 challenging the adjudication order
dated 05.01.2023 passed pursuant to the order of remand by the tribunal
dated 28.07.2023. The tribunal after referring to the decision of the Hon'ble
Supreme Court in Gangadhar Narsingdas Agarwal set aside the original
authority order allowed the appeal by way of remand to the original
authority with a direction to pass a speaking order, finalising the
assessments. There was also a direction of granting a releif as per the
Notification No. 62/2007-Cus dated 03.05.2007 by taking into account the
test report; needless to reiterate that consequential benefits if any, be given
to the respondent herein as per law. It appears that the tribunal was not
apprised at that juncture that no representative were drawn and there was
no tests report. The learned writ court took note of the
direction/observations made by the Division Bench in CUSTA No. 2 of 2023
dated 28.06.2023 and by order dated 06.07.2023 disposed of the writ
petition holding that the Order-in-Original dated 05.01.2023 is not
sustainable and it was set aside and the matter was remanded back to the
adjudicating authority to implement the order of the tribunal dated
28.07.2022 strictly as per findings/observations and directions given by the
tribunal and in particular giving releif as per Notification No. 62/2007-Cus
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
within a time frame. A reading of the direction issued would evidently show
that it is open remand to the original authority to follow the directions of the
tribunal which had directed finalising the assessments and by passing a
speaking order and granting releif of the notification.
34. At this juncture, it would be relevant to take note of the order passed
at various stages of the proceedings. The learned tribunal in the impugned
order directed payment of interest to the respondent at 12% per annum
from 11.01.2011 to 5/6.09.2023 which is date on which the refund was
paid to the respondent. In paragraph 43 of the impugned order, the learned
tribunal states that the respondent had filed the first letter seeking the
finalisation of assessment on 26.05.2009 for the export duty paid during
2007-2008 and subsequently requested for rectification in terms of Section
154 on 01.10.2009. According to the tribunal, though the rectification order
was passed on 05.09.2023, such rectification was first ordered by the
Commissioner (Appeals) vide order dated 06.10.2010. Further the High
Court in all their orders and the tribunal in their orders have taken
cognizance of the order passed by the Commissioner and have made specific
reference that no appeal was preferred by the revenue against the order
passed by the Commissioner. Further, the orders passed by this Court and
by the tribunal holds that the rectification under Section 154 also emanate
basically from the order passed by the Commissioner (Appeals) dated
11.10.2010. Therefore, the learned tribunal came to the conclusion that
11.10.2010 should be taken as the date on which consequential refund
would accrue. Further the tribunal opined that all the supportive documents
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
were available with the department and the department could have
completed the rectification/re-assessment within three months from
11.10.2010 and after allowing the said three months period, interest would
be payable from 11.01.2011. The revenue on the other hand would contend
that refund payable to the respondent got crystalized only on and after the
order-in-original dated 05.09.2023 and in terms of the said order the refund
was effected to the respondent on 06.09.2023.
35. To arrive at the correct factual and legal position, we propose to
examine the scope of the orders passed by the various authorities from time
to time. Though it is stated that the respondent had filed a letter on
26.05.2009, the request made in the letter could not have been acted upon
by the department as the application is required to be filed for invoking the
power under Section 154 of the Act. This application was filed by the
respondent on 01.10.2009. The Deputy Commissioner (Exports) by order
dated 04.06.2010 held that on verification of the related documents it is
seen that the shipping bills in question were assessed based on the
declaration of the exporter (respondent). With regard to the description of
the goods, percentage of iron content, quantity etc. and the related
documents submitted at the time of assessment included the invoice, pre-
shipment inspection certificate etc. and it is seen that there was no mistake
clerical or arithmetical on the part of the assessing officer in the assessment
of the said shipping bills. Therefore, the authority stated that it is not the
case covered by Section 154 of the Act which is confined to clerical or
arithmetical mistake in a decision or to error arising therefrom and
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
accidental slip or omission. The respondent challenged the same by filing an
appeal before the Commissioner of Customs (Appeals), Kolkata. The appeal
was disposed of by order dated 06.10.2010 which was issued to the
respondent on 11.10.2010. The appellate authority took note of the decision
in Gangadhar and the decision of the High Court of Kerala in Union of
India Versus Aluminium Industries Limited 23 and held that the original
authority namely Deputy Commissioner has not rendered any decision
whether the case of the respondent herein is covered by error arising from
accidental slips and error arising from accidental omission and the authority
thus, required to render decision on this as well.
36. The appellate authority took note of the decision of the tribunal in
Bennet Coleman and Company Limited Versus Commissioner of
Customs, Bangalore 24 wherein it was held that the goods when assessed
to higher customs duty on account of omission by assessing officer to take
note of the customs notification, the same cannot be corrected under
Section 154 of the Act. The appellate authority further held that the
assessing officer was duty bound to correctly apply the law laid down by the
Hon'ble Supreme Court and determine the iron content based on the weight
of the iron exported including the weight of the moisture all details which
are available in the stuffing bills / supporting documents and since no such
determination has been made by the assessing officer the same should be
done. Though such observation was made the appellate authority while
(1996) 83 ELT 41
(2008) 232 ELT 367 (Tri-Bang)
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
setting aside the order of the Deputy Commissioner dated 04.06.2010
ordered that the Deputy Commissioner shall dispose of the representation of
the respondent under various letters and determine whether the case of the
respondent herein fits in under error arising out of omission. Further the
direction was that the Deputy Commissioner should consider the ratio of the
judgment referred to in his order and the name given to the term "omission"
in various dictionaries and thereafter passed the order/give decision after
providing opportunity to the appellant. Thus the appeal was allowed on the
above terms.
37. On plain reading of the order passed by the appellate authority dated
06.10.2010 it is clear that the direction issued to the Deputy Commissioner
did not divest his powers to take a decision on merits and the appellate
authority had guided the Deputy Commissioner to consider and determine
whether the case of the respondent fits under the error arising out of an
omission and in doing so, the Deputy Commissioner was required to take
note of the decisions referred to by the appellate authority in his order which
are essentially the decision which were relied on by the respondent at the
time of personal hearing. Therefore, the tribunal erred in coming to the
conclusion that the rectification was first ordered by the Commissioner
(Appeals) in his order dated 06.10.2010. This finding is factually incorrect.
38. The original authority upon such remand passed the order-in-original
dated 11.05.2015 noted the facts of the case, Section 154 of the Act, the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
Board Circular No. 4/2022-Cus dated 17.02.2012 and held that at no point
of time there was any omission on the part of the assessing officer.
39. Further it was noted that identical goods were exported by the
respondent in May 2008 wherein they have declared iron percentage in
actual received condition that is weight basis (including moisture) and also
mentioned applicable rate of duty as Rs. 50/- per metric tonne. The
assessing officer while assessing the shipping bills rejected the declaration
made by the respondent and assessed the case considering the iron content
on high metric tonne basis which was challenged by respondent by filing the
appeal and whereas in the subject export, the respondent exporter himself
declared iron content on deemed basis and thereafter seeks for grant of
benefit of the exemption notification by resorting to Section 154 of the Act.
Further it was pointed out that the respondent should have declared the
iron content in actual received basis that is weight basis (including
moisture) to avail the benefit of the exemption notification No. 62/2007-Cus
and therefore the omission if any, was on the part of the respondent but not
on the part of the assessing officer. In this regard, the authority placed
reliance on the decision of the Hon'ble Division Bench of the Delhi High
Court in Indo Rama Synthetics Versus Union of India 25 wherein it was
held that Section 154 applies only if mistake or error will be made by the
department and not clerical mistake or error made by the assessee.
Thereafter, the authority proceeded to discuss about judgments which was
relied on by the respondent before the appellate authority.
(2002) 143 ELT 299
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
40. The authority placed reliance on the decision of the tribunal in
Minerals and Metals Trading Corporation of India Limited Versus
Collector of Customs, Bombay 26 wherein it was held that correction of
clerical or arithmetical mistakes under Section 154 and Section 27 of the
Act to be interpreted harmoniously so that it is not rendered negatory.
Rectification under Section 154 should not be involved in refund or short
levy demand for which Section 27 and 28 of the Act have to prevail. Further
refund or demand of short levy requires substantive review of the earlier
assessment order and such review should be made by an appropriate higher
officer. The authority also placed reliance on the decision of the tribunal in
Jindal Saw Limited Versus Commissioner of Customs, Kandla 27
wherein it was held that not claiming exemption benefit is not a clerical
error, and it can be brought into when there is accidental omission
arithmetical error, calculation error, exchange rate not calculated and
incorrect currency noted and payment of customs duty without claiming
exemption benefit is not covered under Section 154. In the light of the said
discussion, the authority namely Assistant Commissioner of Customs by his
order dated 11.05.2020 rejected the request for rectification of the shipping
bills under Section 154 of the Act as there was no clerical or arithmetical
error or accidental slip or omission made by the assessing officer. The
respondent carried the matter on appeal before the Commissioner of
Customs (Appeals), Kolkata. The appeal was dismissed by order dated
13.05.2016.
(1987) 28 ELT 128 (Tribunal)
(2006) 202 ELT 800
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
41. In the interregnum, the respondent filed the writ petition before this
Court challenging the order dated 11.05.2015 passed by the Assistant
Commissioner rejecting the prayer for rectification. The learned advocate for
the respondent is not able to place the copy of the order passed in the writ
petition nor the case number or date but would submit that the writ petition
was dismissed on the ground that the respondent has an alternate remedy.
It is thereafter the appeal was filed before the appellate authority which was
dismissed by the order dated 13.05.2016. The respondent challenged, the
order passed by the appellate authority before the tribunal. The tribunal in
its order dated 28.07.2022 held that the order of the Assistant
Commissioner was not in tune with the order passed by the appellate
authority against which order the department did not prefer any appeal.
42. Further the tribunal observed that the correct iron content was
required to be determined on the basis of the guidelines contained in the
judgment of the Hon'ble Supreme Court in Gangadhar . The tribunal
further held that not following the order passed by this court or the Hon'ble
Supreme Court would amount to mistake/error which is rectifiable under
the provisions of Section 154 of the Act. The tribunal recorded the stand
taken by the respondent that the assessment was provisional and therefore
set aside the order passed by the appellate authority and the original
authority with a direction to the original authority to finalise the assessment
adhering the guidelines of the Hon'ble Supreme Court in case of
Gangadhar. Accordingly, the orders were set aside and the matter was
remanded to the original authority to pass a speaking order finalizing the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
assessments with a direction that relief as per Notification No. 62/2007-
Cus dated 03.05.2007 to be given effect taking into account the test report,
to grant the consequential benefits, if any, to the respondent as per law.
43. It is no doubt true that in the body of the order passed by the learned
tribunal more particularly paragraph 5 and 6 there are certain observations
which wholly enure in favour of the respondent. Nonetheless, while setting
aside the order passed by the appellate authority and the original authority,
the matter was remanded to the original authority to pass a speaking order
and finalising the assessments. It is not clear as to whether it was brought
to the notice of the learned tribunal that there was no provisional
assessment made at the first instance as the respondent did not seek for
any provisional assessment nor any bond or security was given and the
assessment were final assessments based on the value weight and
description as declared by the respondent, accepted by the department, duty
paid voluntarily and the goods permitted to be exported. Thus, the order
passed by the learned tribunal dated 28.07.2022 is not a positive direction
to the authority by directing re-assessment of the shipping bills and
calculating the correct amount of duty payable and computing the excess
duty paid by applying Notification 62/2007 and refunding the excess duty
collected from the respondent. In the absence of any such positive direction,
direction issued by the tribunal it cannot be interpreted to be a direction to
carry out re-assessment when the matter stood remanded to the original
authority. After considering the direction issued by the learned tribunal and
the submissions of the respondent the original authority passed an order on
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
05.01.2023 stating that none of the shipping bills the respondent claimed
benefit of Notification No. 62/2007-Cus. Further there is no mention of any
test report in the shipping bills and the corresponding documents submitted
by the respondent. The assessment was done on the basis of declaration
made and related documents submitted by the respondent and duty was
levied at the rate of Rs. 300/- per metric tonne on the declared iron content
which was more than 62% and the assessment was done in accordance with
the decision of the Hon'ble Supreme Court. Furthermore, it was noted that
no sample was drawn by proper officer and the assessment were done on
the basis of the declared iron content which was more than 62% and the
related documents submitted at the time of export and applicable export
duty at Rs. 300/- per metric tonne was levied on the declared weight
(WMT). Further the respondent did not challenge the assessment order by
filing an appeal but sought for a rectification under Section 154 after one
and a half years from the date of assessment. Further the respondent
neither deposited the export duty under protest nor asked for exemption
under Notification No. 62/2007-Cus. The assessment was not provisional as
the assessing officer did not ask for drawing any sample for determination of
moisture content and therefore there is no scope left except to finalise
finalisation of the assessment by the assessing officer. Further it was
pointed out that the respondent did not file any refund application under
Section 27 of the Act within six months from the date of payment of duty.
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
44. Ultimately, the application was rejected holding that there was no
clerical, arithmetical error or accidental slip or omission on the part of the
Assessing Officer at the time of assessment and there is no scope of any
consequential relief to be granted to the respondent by way of finalization of
the assessment and also due to the bar of limitation.
45. The Department had filed an appeal before this court in CUSTA 2 of
2023 challenging the order passed by the learned Tribunal dated
28.07.2022. The Hon'ble Division Bench by order dated 28 th June, 2003
dismissed the appeal filed by the revenue on the ground that no question of
law, far less, substantial question of law is involved in the appeal.
Essentially, the Hon'ble Division Bench opined that it will be too late in the
day for the revenue to take such plea with regard to whether it was an error
or omission since the Department did not challenge the order passed in the
appeal. Thus, a careful reading of the judgment of the Hon'ble Division
Bench would show that there was no positive direction to the Department to
pass a re-assessment order and consequentially grant refund.
46. The respondent filed WPO 636 of 2023 challenging the order-in-
original dated 05.01.2023 by which the refund application was rejected by
the original authority. The learned writ Court while disposing of the writ
petition by order dated 28th June, 2023 opined that the adjudicating
authority has not acted strictly as per the findings, observations and
directions given by the Tribunal, rather it has given its own reasons and
opinion and not implemented the order of the Tribunal in its letter and spirit
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
and accordingly set aside the order-in-original dated 05.01.2023 and
remanded the matter back to the adjudicating authority to implement the
order of the Tribunal dated 28.07.2022 strictly as per findings, observations
and directions given by the Tribunal and particularly giving relief to the
respondent (petitioner therein) as per notification 62/2007-Cus as per
paragraph 8 of the order of the Tribunal within a timeframe by passing a
reasoned and speaking order after giving opportunity of hearing to the
respondent or its authorized representative. Thus, a plain of the order
passed in the writ petition dated 06.07.2023 it is seen that there was no
positive direction for refunding the excess duty paid but the matter was
remanded back to the original authority with a direction to him to act in a
particular manner and in terms of the letter and spirit of the order passed
by the Tribunal. Thus, it is clear that the reassessment of the originally
assessed shipping bills had not taken place upto the date on which the writ
petition was disposed of (i.e) on 06.07.2023. In other words, the factual
position clearly demonstrate that no refund was computed/ determined for
it to become payable. To put it in a different manner the amount of refund
never got crystalized until the date of the of the disposal of the writ petition.
After the disposal of the writ petition, the original authority took up the
matter for de novo consideration and passed a reassessment-cum-refund
order dated 05.09.2023 and in terms of the said order refund was effected to
the respondent on 06.09.2023. By the said order dated 05.09.2023, it was
for the first time the benefit of the notification 62/2007 was extended to the
respondent and the excess duty paid was computed and refund was
ordered. After receiving the refund, the respondent submitted a letter on
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
03.10.2023 claiming interest on the refunded amount. The said request was
rejected by order-in-original dated 28.11.2023 referring to Section 27A of the
Act stating that there is only one provision under the Act for granting the
interest wherein it has been prescribed that only in case of delayed sanction
of refund of duty after expiry of the prescribed time limit of three months
from the date of receipt of refund application interest is to be paid. Reference
was also made to Sub-Section (2) of Section 27 which we have dealt with in
the preceding paragraphs.
47. The authority came to the conclusion that there is no delay in
sanctioning the claim and hence, no interest is payable in terms of Section
27A of the Act. The respondent preferred an appeal before the Commissioner
of Customs (Appeals) Kolkata. The appellate authority by order dated
18.07.2024 disposed of the appeal by remanding the matter holding that the
time limit for sanction of interest on delayed refund might be counted in
terms of the Tribunal's order dated 28.07.2022, and accordingly, directed
the authority to re-examine the matter in terms of the court's direction.
Aggrieved by the same, the respondent preferred appeal before the Tribunal
which was allowed by order dated 07.01.2025, impugned in this appeal.
48. To be noted that the Tribunal in the impugned order granted larger
relief to the respondent by allowing interest from 11.01.2011 whereas the
appellate authority directed to compute the time limit for sanction of interest
from the date of the Tribunal's order dated 28.07.2022.
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
49. Entire facts and purport of the various orders which have been set
out above will clearly demonstrate that the refund payable to the respondent
got crystalized only after the order dated 05.09.2023. Therefore, to shift the
date to an anterior date prior to the date on which refund got crystalized
would tantamount to rewriting the statutory provision and rendering Section
27 and 27A negatory. That apart, by operation of law (i.e.) in terms of Sub-
Section (2) of Section 27, the date gets postposed to the date of
reassessment order which was passed on 05.09.2023.
50. At this juncture, it is beneficial to take note of the decision of the
Hon'ble Supreme Court in ITC Limited wherein the Hon'ble Supreme Court
held that it is apparent from the provisions of refund that it is more or less
in the nature of execution proceedings and it is not open to the authority
which processes the refund to make a fresh assessment on merit and to
correct assessment on the basis of mistake or otherwise. Furthermore, after
referring to Section 128 of the Act, it was held that an order of self-
assessment is an assessment order passed under the Act and it would be
appealable by any person aggrieved. The expression "any person" is of wider
aptitude, the revenue as well as the assesse can also prefer an appeal
aggrieved by an order of assessment. Further, it was held that the provisions
of 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. It was pointed out that the order of self-
assessment is required to be followed unless modified before the claim for
refund is entertained under Section 27. Refund proceedings are in the
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
nature of execution for refunding the amount, it is not assessment or
reassessment proceedings at all. Further, while processing a refund
application, reassessment is not permitted nor conditions of exemption can
be adjudicated and reassessment is permitted only under Section 17(3), (4)
and (5) of the amended provisions. Further it was held that similar was
position prior to the amendment. Further, the scope of the provisions of
refund under Section 27 cannot be enlarged and it has to be read with a
provision of Sections 17,18, 28 and 128. After taking note of the overall
effect of the provisions prior to the amendment and post amendment under
Finance Act, 2011 it was held that the claim for refund cannot be
entertained unless the order of assessment or self-assessment is modified in
accordance with law by taking recourse to the appropriate proceedings and
it would not be within the ken of Section 27 to set aside the order of self-
assessment and reassess the duty for making refund; and in case any
person is aggrieved by any order which would include self-assessment, he
has to get the order modified under Section 154 or under other relevant
provisions of the Act. Thus, the judgment of the Hon'ble Supreme Court has
vividly explained the scheme of Section 27 and if the law laid down in ITC is
applied to the respondent's case, it has to be held that the refund got
crystalized in favour of the respondent only on and after the order-in-
original dated 05.09.2023 by which the assessment of the shipping bills was
reassessed/ modified. Therefore, the Tribunal fell in error in directing
payment of interest from an anterior date when the refund did not get
crystalized in favour of the respondent. The learned Advocate appearing or
the respondents had relied upon various decisions before the Tribunal some
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
of which were also relied upon before this Court, namely, Sandvik Asia
Ltd., Riba Textiles Ltd., Parle Agro Pvt. Ltd., Keshari Steels, DHL
Express India Pvt. Ltd.
51. In Sandvik Asia the facts are different and it was not a case where
the assessment of the shipping bills was made based on the declaration of
the assessee. The decision in Riba Textiles is also distinguishable on facts
as it pertained to payment/ deposit of duty during investigation and
adjudication. In Keshari Steels the matter pertained to excess recovery by
the Department which was on account of error in calculation. This decision
cannot be of any assistance to the respondent. The decision in Gujarat
Fluoro Chemicals in which the Hon'ble Supreme Court on facts found
inordinate delay in refunding certain amounts which included statutory
interest and a revenue was ordered to pay compensation and not interest on
interest. In Willowood Chemicals Pvt. Ltd. a writ petition was held to be
maintainable for payment of interest. However, it was observed that the case
has to be decided purely in the light of the connected statutory provisions
and in the light of the statute and the rate of the interest was fixed at 6%
only. In the case of DHL Express India Ltd., it was a case of customs duty
mistakenly paid by the company on account of erroneous calculation based
upon details published by banks. In the case of KVR Construction was a
case where the refund claim was rejected on the ground it was filed beyond
the period of limitation prescribed under Section 11B of the Central Excise
Act, 1944. In the facts of the said case, the Court noted that what was
sought as refund was the amount paid under mistaken motion which even
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
according to the Department was not liable to be paid. Therefore, the Court
came to the conclusion that the amount paid by the petitioner therein under
mistaken motion would not be a duty of service tax payable in law.
52. In the case on hand the Department never accepted the stand taken
by the respondent, rather the entire litigation was focused on the scope of
Section 154, whether the original assessment order which was not a
provisional assessment but a final assessment based on self-declaration
with regard to the weight, quantity etc. could be rectified in exercise of
powers under Section 154 of the Act. Therefore, we are of the view that this
decision will not assist the respondent.
53. In the case of Reliance Transport and Travel Ltd. it was a matter
pertaining the amount deposited during investigation and amount was
directed to be refunded with interest at 12% when the Department failed to
adjudicate show-cause notices for several years and kept it pending in the
call book without intimation to the assessee. This decision is wholly
inapplicable to the facts of the present case. Other decisions relied on by the
learned Advocate appearing for the respondent with regard to the rate of
interest are not required to be gone into in the light of our conclusion that
the respondent is not entitled for any interest as there is no delay in
effecting the refund.
CUSTA NO. 14 OF 2025
REPORTABLE
2025:CHC-OS:175-DB
54. Therefore, for all purposes the refund stood crystalized in favour of
the respondent only on and after 05.09.2023 when the re-assessment order
was passed.
55. For all the above reasons, the appeal is allowed and the order passed
by the learned tribunal is set aside and the substantial questions of law are
answered in favour of the appellant revenue.
(T.S. SIVAGNANAM, CJ.)
I Agree.
[CHAITALI CHATTERJEE (DAS), J.]
(P.A.- PRAMITA/SACHIN)
