The Commissioner Of Customs vs M/S. S.V.Sivalinga Nadar & Sons
2021 Latest Caselaw 9821 Ker

                    IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                     PRESENT

                      THE HONOURABLE MR.JUSTICE S.V.BHATTI

                                        &

                 THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS

         WEDNESDAY, THE 24TH DAY OF MARCH 2021 / 3RD CHAITHRA, 1943

                              Cus.Appeal.No.3 OF 2018

  AGAINST THE FINAL ORDER NO.21924/2017 IN APPEAL NO.C/21236/2016 OF CUSTOMS,
             EXCISE & SERVICE TAX APPELLATE TRIBUNAL, BANGALORE


APPELLANT/S:

                 THE COMMISSIONER OF CUSTOMS
                 CUSTOMS HOUSE, W/ISLAND, KOCHI - 682 009.

                 BY ADV. SMT.SHEELA DEVI.I., SC, CENTRAL BOARD OF EXCISE AND
                 CUSTOMS

RESPONDENT/S:

                 M/S. S.V.SIVALINGA NADAR & SONS
                 POST BOX NO.75, (444) 866, PANDIT JAWARHARLAL NEHRU
                 ROAD,VILLUPURAM - 605 602.

                 R1 BY ADV. SMT.LATHA SUSAN CHERIAN
                 R1 BY ADV. SMT.K.S.SANTHI

OTHER PRESENT:

                 SR ADV . GEORGE CHERIAN

      THIS CUSTOMS APPEAL HAVING BEEN FINALLY HEARD ON 24.03.2021, THE COURT
ON THE SAME DAY DELIVERED THE FOLLOWING:
 Customs Appeal No.3/2018

                                     -2-




                             JUDGMENT

Dated this the 24th day of March 2021

S.V. Bhatti, J.

Revenue is the appellant. The issue arises under the Customs

Act, 1962. The appellant challenges the order in Appeal No.

C/21236/2016 dated 02.08.2017 of Customs, Excise and Service Tax

Appellate Tribunal (CESTAT), Regional Bench at Bangalore. The

Tribunal, through order in Annexure C dated 02.08.2017, ordered

refund of a sum of Rs.25 lakhs paid towards redemption fine and

Rs.5 lakhs towards penalty by M/s. S V Sivalinga Nadar and Sons,

the respondent herein.

2. To appreciate the circumstances under which the claim

for refund has been made by the respondent and accepted by the

Tribunal, we find it convenient to chronologically refer to the Customs Appeal No.3/2018

following dates and events in the matter.

3. The respondent imported goods as per Bill of Entry

No.221 dated 15.04.1988. The Collector of Customs by order dated

14.06.1988 levied redemption fine of Rs.25 lakhs under Section 125

of the Customs Act, besides a penalty of Rs.5 lakhs on the

respondent against Bill of Entry dated 15.04.1988. The respondent

challenged the said order before the Tribunal in Appeal No.

630/1988 and the Tribunal by order dated 08.12.1988 remanded the

matter to primary authority for adjudication afresh. In the

interregnum, the respondent, under different clearances, effected

piecemeal removal of goods, between 05.12.1988 and 11.01.1989

from the Customs Warehouse. It is not in dispute that the

respondent, by paying customs duty applicable, has moved the

goods from the Customs area. The Collector of Customs, upon

remand, on 30.05.1991 levied penalty of Rs.40 lakhs under Section

112 of the Customs Act, on the ground that the consignment has

been removed from the customs area and goods not available for Customs Appeal No.3/2018

confiscation. The respondent filed Appeal No.C/602/91/MAS and

the Tribunal by order No.190/1995 dated 01.03.1995 ordered the

appeal and held as follows:

"4. We have considered the submissions made before us. The short issue before us is about the appellant's liability to penalty and the quantum thereof based on relevant criteria in accordance with law in the facts and circumstances of the case under the Act. We note that for actually working out the profit margin the duty on the warehousing bond interest paid/payable and likewise other expenses incurred should be taken note of before arriving at the quantum of the profit. We further note that the appellant's appeal remains dismissed by the Special Bench by Order No.C/91 & 92/92- D, dated 04.03.1992, a copy of which has been produced before us. Therefore, without expressing any opinion on the merits of the issue and leaving all the issues open to be decided in accordance with law by the adjudicating authority, we remand the matter for disposing of the issue in accordance with law and taking note of the observations of the Tribunal in the order referred to earlier. Ordered accordingly. Shri J M Jeyaseelan, the learned DR submitted that the adjudicating authority may also be directed to verify as to whether the duty levied on the consignment in question relates to the appellant.

Sd/-

                                                        (S. Kalyanam)
         Dated 13.03.1994                               Vice President
 Customs Appeal No.3/2018

[Order per: V P Gulati, Member (T)].- I observe that when the adjudicating authority passed the impugned order, the order of the Tribunal cited by the learned Consultant under which the appellant's appeal in regard to the additional duty demanded has been dismissed was not available and the appellants also had not brought to the notice of the adjudicating authority about the demands raised against them by the lower authorities for additional duty. Any duty liability fixed on the goods is a relevant factor for consideration for working out the margin of the profit based on the payments actually made and other expenses incurred. In this context it will also be relevant to take into consideration the use of the funds the appellants had after sale of the goods. In view of the above, I agree with my learned Brother that the matter will have to be considered afresh for fixing the margin of profit taking into consideration the above."

4. The effect of order dated 01.03.1995 is that the levy of

penalty amounting to Rs.40 lakhs has been set aside, the matter

remitted to primary authority for adjudication afresh. It needs to

be noted, at this juncture of our narration, that the order dated

14.06.1988 was also set aside by order dated 08.12.1988, and, in

effect, there is no order under the Customs Act, either levying Customs Appeal No.3/2018

redemption fine or penalty on the respondent. The respondent, in

the year 2011-12, applied for refund of redemption fine of Rs.25

lakhs and penalty of Rs.5 lakhs apparently on the premise that there

is no order against respondent authorizing fine and penalty. The

Deputy Commissioner, while adjudicating the claim for refund, in

Annexure A order dated 17.09.2015 noted that Section 27 of the

Customs Act does not deal with refund of redemption fine and

penalty, and also not barred by the limitation prescribed therein.

Therefore, an application for refund of redemption fine and penalty

could be made at any time or any number of times. The respondent,

after lapse of 17 years, on the basis of a CESTAT order made on

01.03.1995, is claiming refund of redemption fine and penalty. The

first reason to refuse the claim for refund is that the order dated

01.03.1995 of CESTAT does not direct the refund authority for

sanctioning the amount claimed by the applicant. The claim is

unsupported by original documents. The want of original

documents is a substantial reason. Therefore, the request of refund Customs Appeal No.3/2018

is treated as incomplete, insufficient, unsubstantiated, and

accordingly rejected. The respondent, aggrieved by the order in

Annexure-A, filed appeal before the Commissioner of Customs

(Appeals). Through order in Annexure B the Commissioner

accepted the explanation/reply of the respondent that the originals

are misplaced, however, the copies of Register of Cash/Deposit

Miscellaneous receipts for date 28.11.1998 have been produced as

proof of payment of redemption fine and penalty. The

Commissioner of Customs (Appeals) accepted the said set of

documents as sufficiently showing proof of payment of redemption

fine and penalty. However, the appeal stood dismissed on the

ground that the order dated 01.03.1995 does not direct authority for

refund of fine and penalty. It is noted that the respondent herein

did not pursue the matter after remand before the CEGAT and in the

absence of a direction from the Appellate Tribunal, the claim for

refund is unsustainable. Thus, rejected the appeal filed by the

respondent. The matter was carried in appeal before the CESTAT, Customs Appeal No.3/2018

and through order dated 02.08.2017, the appeal has been allowed.

The Tribunal found that the order dated 14.06.1988 and 13.05.2016

said to have been made levying redemption fine and penalty were

set aside and no more in operation. As the orders in original are set

aside, there is no occasion for confiscation of goods or redemption

fine in lieu of confiscation. The authorities, in the case on hand,

failed to act in the matter upon remand by the CEGAT. Therefore,

unless there is an order levying redemption fine and penalty, the

said sums cannot be retained by the Revenue. In other words, the

Department cannot retain the redemption fine and penalty amount

for any violation of import of subject consignment by the

respondent in the absence of an order to that effect.

5. Advocate I Sheela Devi appearing for the appellant

contends that (i) the claim is unsupported by documents; (ii) Section

27 is attracted and the refund claim is after 14 years of alleged

deposit; and, (iii) the CEGAT did not direct refund of redemption

fine and penalty, therefore the refund ordered in contrary to Customs Appeal No.3/2018

Customs Act, 1962.

6. Senior Advocate George Cherian contends that the

grounds canvassed before this Court are substantially similar to the

grounds canvassed before the Tribunal. The findings recorded by

the Appellate Authority and the Tribunal sufficiently disclose that

these grounds are not available to the appellant herein in an appeal

filed under Section 130 of Customs Act.

7. The first contention is that the claim for refund is made

by respondent without supporting documents. This ground is raised

by the appellant without firstly taking note of the observation made

by the Commissioner of Appeals in Annexure-B order wherein the

claim of respondent with the documents available and produced by

respondent has been accepted as sufficient for processing the claim

of refund. The Department, if was desirous of challenging the said

finding ought to have maintained an appeal before the CESTAT.

Having not pursued the remedy against anything recorded on the

proof now produced by the respondent, the ground that the refund Customs Appeal No.3/2018

claim is made without supporting documents is unsustainable in law

and fact, the contention is rejected.

7.1 The next argument refers to Section 27 of the Customs

Act, 1962. According to Advocate for appellant, Section 27 is

attracted to the case on hand, the claim for refund could not be

made beyond one year from the date on which the amount is paid or

as is applicable while reading Section 27. The argument on

limitation presupposes that Section 27 is squarely applicable to the

case on hand. Section 27 deals with refund of duty paid, and reads

thus:

"27. Claim for refund of duty.--

[(1) 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 Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest:

(emphasis supplied) PROVIDED that where an application for refund has been made before Customs Appeal No.3/2018

the date on which the Finance Bill, 2011 receives the assent of the President, such application shall be deemed to have been made under sub-section (1), as it stood before the date on which the Finance Bill, 2011 receives the assent of the President and the same shall be dealt with in accordance with the provisions of sub-section (2): PROVIDED FURTHER that the limitation of one year shall not apply where any duty or interest has been paid under protest. [PROVIDED ALSO that where the amount of refund claimed is less than rupees one hundred, the same shall not be refunded.] Explanation.--For the purposes of this sub-section, ―the date of payment of duty or interest‖ in relation to a person, other than the importer, shall be construed as ―the date of purchase of goods by such person."

xxx xxx xxx xxx"

From a bare reading of Section 27, it is clear that Section 27 deals

with refund of duty/interest. We have read the definition of 'duty'

to ascertain whether 'duty' in any situation includes redemption

fine and penalty as well. The definition of word 'duty' does not give

an indication to the said effect. In other words, according to

definition in Section 2(15) of Customs Act, 1962, 'duty' means duty

leviable under the Act. Section 27, in our considered view, does not Customs Appeal No.3/2018

deal with a claim for redemption fine and penalty. The said

contention is unsustainable and accordingly rejected.

7.2 The next argument is that the Tribunal through orders

dated 08.12.1988 and 01.03.1995 did not direct refund of redemption

fine and penalty to the respondent. This argument is considered by

the Tribunal and the reasons assigned by the Tribunal in the order

under appeal are that the authorities are under obligation to pass

fresh order upon remand by the CESTAT. The authorities did not

pass order levying redemption fine/penalty. Had it been a case

where the redemption fine and penalty are set aside, different

considerations apply. Here is a case where the matter has been

remitted to the primary authority for fresh decision. With a view to

continuing to collect or demand or retain redemption fine/penalty,

order to that effect is a condition precedent. In the absence of an

order, the Department cannot continue to withhold what has been

collected as redemption fine and penalty. Hence, the last ground

canvassed by the appellant is also unsustainable in law and Customs Appeal No.3/2018

accordingly rejected.

For the above reasons recorded, and by appreciating the

reasons recorded by the Tribunal, we are of the view that the

direction for refund of redemption fine amounting to Rs.25 lakhs

and penalty of Rs.5 lakhs in favour of respondent is sustainable in

law and fact. The appeal fails and accordingly dismissed. No order

as to costs.

Sd/-

S.V.BHATTI

JUDGE

Sd/-

BECHU KURIAN THOMAS

JUDGE

jjj Customs Appeal No.3/2018

APPENDIX PETITIONER'S/S EXHIBITS:

ANNEXURE-A TRUE COPY OF THE ORDER IN ORIGINAL NO. 975/2015 DATED 17/09/2015 ISSUED BY THE APPELLANT TO THE RESPONDENT.

ANNEXURE-B TRUE COPY OF THE ORDER IN APPEAL NO. COC-CUSTM-

000-APP-30/2016-17 DATED 13/05/2016 ISSUED BY THE COMMISSIONER OF CUSTOMS(APPEALS),COCHIN.

ANNEXURE-C TRUE COPY OF THE FINAL ORDER NO.21924/2017 DATED 02/08/2017 OF THE HON'BLE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, BANGALORE.