Karnataka High Court

Commissioner Of Customs vs M/S Ttk Prestige Limited on 18 January, 2021

Author: Alok Aradhe Rangaswamy

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 18TH DAY OF JANUARY, 2021

                        PRESENT

         THE HON'BLE MR.JUSTICE ALOK ARADHE

                            AND

   THE HON'BLE MR.JUSTICE NATARAJ RANGASWAMY

               C.S.T.A. NO.14 OF 2017

BETWEEN:

COMMISSIONER OF CUSTOMS,
C.R.BUILDING,
QUEENS ROAD,
BANGALORE-560001
                                            ...APPELLANT

(BY SRI. JEEVAN J. NEERALGI, ADVOCATE)

AND:

M/S TTK PRESTIGE LIMITED,
NO.78, OLD MADRAS ROAD,
DOORAVANINAGAR,
BANGALORE-560016.
                                          ...RESPONDENT

(SERVICE OF NOTICE ON RESPONDENT IS HELD SUFFICIENT
VIDE COURT ORDER DATED 26.02.2020)

     THIS APPEAL IS FILED UNDER SECTION 130 OF THE
CUSTOMS ACT ARISING OUT OF ORDER DATED 06.09.2017
PASSED IN FINAL ORDER NO.21949/2017 BY THE CESTAT,
BENGALURU PRAYING THIS COURT TO (i) ALLOW THE APPEAL
OF THE Appellant (ii) DECIDE THE SUBSTANTIAL QUESTION OF
LAW AS FRAMED ABOVE (iii) SET ASIDE THE FINAL ORDER
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NO.21949/2017 DATED 06.09.2017 PASSED BY THE CESTAT,
BENGALURU AND ETC.,

     THIS APPEAL COMING ON FOR HEARING THIS DAY,
ALOK ARADHE, J., DELIVERED THE FOLLOWING:

                        JUDGMENT

This appeal under Section 130 of the Customs Act,

1962 has been filed by the revenue against the order

dated 06.09.2017 passed by the Customs, Excise and

Service Tax Appellate Tribunal (hereinafter referred to as

"the Tribunal" for short). The appeal was admitted by the

Bench of this Court vide order dated 09.11.2018 on the

following substantial question of law:

"Whether the Notification No.10 of 2006 is applicable to the assessee herein and whether the Tribunal committed an error in granting relief under the said Notification?"

2. The facts leading to filing of this appeal briefly

stated are that on 10.10.2006, the respondent imported

Aluminium Non-Stick Cookware and cleared the same

under the Bill of Entry. The said Bill of Entry were assessed

to customs duty and were cleared on payment of duty.

Thereafter, on 16.11.2006, the respondent made a refund

claim of Rs.17,72,941.88 on the basis of the General

Exemption No.53, Sl.No.14, wherein the goods are

classifiable under CSH76151100, 761519 like table,

kitchen or other house hold articles, scourers and scouring

or polishing pads, gloves and the like other than parts and

pressure cookers falling under tariff item 7615190 as the

aforesaid item attract NIL rate of duty. The Deputy

Commissioner of Customs (Inland Container Depot) issued

a show cause notice dated 14.10.2006, by which the

respondent was asked to reply to the show cause notice as

to why the claim for refund cannot be rejected. Then, the

Deputy Commissioner of Customs, on 07.02.2007 rejected

the claim for refund made by the respondent. The

assessee thereupon filed an appeal before the

Commissioner (Appeals), who by an order dated

28.06.2007 dismissed the appeal preferred by the

respondent. The respondent there upon approached the

Tribunal by filing an appeal. The Tribunal by an order

dated 06.09.2017, allowed the appeal preferred by the

respondent and granted the consequential relief. In the

aforesaid factual background, this appeal has been filed by

the revenue.

3. Learned counsel for the revenue has raised a

singular contention that the Tribunal failed to appreciate

that the respondent was not entitled to claim refund, as he

had not challenged the original order of assessment. It is

further submitted that the Tribunal grossly erred in placing

reliance on Notification No.10/2006 dated 01.03.2006. In

support of the aforesaid submissions, learned counsel for

the revenue has placed reliance on the decisions of the

Supreme Court in Priya Blue Industries Ltd., v.

Commissioner of Customs (Preventive), [2004] 2004

taxmann.com 347 (SC) and in ITC Limited Vs.

Commissioner of Central Excise, Kolkata IV, (2019)

17 SCC 46.

4. We have considered the submissions made by

learned counsel for the revenue and have perused the

record. The issue which rises for consideration in this

appeal is, whether the respondent is entitled to claim

refund without challenging the order of assessment which

has attained finality?

5. The Supreme Court in Priya Blue Industries

Ltd., (supra) has held that under Section 27 of the

Customs Act, 1962, a claim for refund can be made by any

person who had (a) paid duty in pursuance of an order of

assessment or (b) a person who had borne the duty. It

has further been held that unless the order of assessment

can be reviewed under Section 28 of the Act and / or

modified in an appeal, that order of assessment stands.

The duty would be payable as per the order of assessment.

It has also been held that refund claim is not an appeal

proceeding and an officer considering a refund claim

cannot sit in the appeal over an assessment made by a

competent officer and cannot review an order of

assessment. The aforesaid decision was followed by the

Supreme Court in ITC Limited (supra) and it was held in

Paragraph 44 as under:

"44. The provisions under 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. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section

27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or reassessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, reassessment is not permitted nor conditions of exemption can be adjudicated. Reassessment is permitted only under Sections 17(3), (4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will virtually amount to an order of assessment or reassessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the

entire issue which cannot be done in the ken of the refund provisions under Section 27. In Hero Cycles Ltd. v. Union of India, (2009 SCC OnLine Bom 801) though the High Court interfered to direct the entertainment of refund application of the duty paid under the mistake of law. However, it was observed that amendment to the original order of assessment is necessary as the relief for a refund of claim is not available as held by this Court in Priya Blue Industries Ltd. Vs. Commr. Of Customs [(2005) 10 SCC 433]".

6. In view of the aforesaid enunciation of law, it is

evident that a person is not entitled to claim refund of duty

without challenging an order of assessment. In the facts

of the case, there is no material placed on record to show

that there is any challenge made to the assessment order.

Therefore, the order passed by the Tribunal is in

contravention of the law laid down by the Supreme Court

in the case of ITC Limited (supra) and therefore, the same

cannot be sustained in the eye of law.

7. So far as the reliance placed by the Tribunal on

the Notification No.10/2006 dated 01.03.2006 is

concerned, the same is of no avail to the respondent. In