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Aman Medical Products Ltd. v. Commissioner Of Customs, Delhi
Factual and Procedural Background
The core issue in this appeal concerns whether an assessee entitled to a concessional rate of customs duty, who paid a higher duty by inadvertence when filing a bill of entry, is entitled to a refund of the excess duty paid without having earlier filed an appeal against any assessment order. The assessee's position was that no adjudicatory 'order' had been passed because the payment was made on filing the bill of entry and the assessee had, through ignorance, failed to claim benefit of notification No. 6/2002 dated 1.3.2002. The Customs Excise and Service Tax Appellate Tribunal (CESTAT) held that a refund under Section 27 of the Customs Act, 1962, is available only where the duty was paid pursuant to an order of assessment; consequently, it treated refund claims as requiring a prior appeal against such an order. The High Court admitted the appeal, framed a question of law for determination, reproduced the relevant provision (Section 27), and proceeded to decide whether a refund claim is maintainable where duty was paid without there being any adversarial assessment order.
Legal Issues Presented
- Whether non-filing of an appeal against the assessed bill of entry, in a situation where there was no lis between the importer and the revenue at the time of payment of duty, will deprive the importer of the right to file a refund claim under Section 27 of the Customs Act, 1962?
Arguments of the Parties
Appellant's Arguments
- The appellant contended that no 'order' was passed when the bill of entry was filed and duty was paid; the payment was made inadvertently and without taking the benefit of notification No. 6/2002 dated 1.3.2002 due to ignorance.
- Therefore, the appellant argued that it was not required to have filed an appeal against any assessment order in order to claim a refund under Section 27, because there was no assessment order to challenge.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| CCE, Kanpur v. Flock (India) Pvt. Ltd. [2000 (120) ELT 285] | Principle that where an adjudicating authority has passed an appealable assessment order and the party does not exercise the statutory right of appeal, the party cannot later question the correctness of that order by a refund claim. | The Court observed this case involved an assessment order; consequently its principle (denying later refund claims where no appeal was filed against an appealable order) is not applicable to the present facts because there was no adversarial assessment order here. |
| Priya Blue Industries Ltd. v. Commissioner Of Customs (Preventive) 2004 (172) ELT 145 (SC) | Same principle as above concerning the requirement to challenge an appealable adjudication order by filing an appeal rather than seeking a refund later. | The Court noted this Supreme Court decision also concerned cases with assessment orders; it held that the decision does not apply where no assessment order was passed and there was no lis at the time of payment. |
Court's Reasoning and Analysis
The Court began with the text of Section 27 of the Customs Act, 1962, which provides that any person claiming refund of any duty may apply for refund where the duty is either "(i) paid by him in pursuance of an order of assessment; or (ii) borne by him." The Court emphasised the disjunctive ("or") structure of clauses (i) and (ii) in sub‑section (1), holding that the two clauses are alternative and cover distinct categories.
Applying this linguistic and purposive interpretation, the Court reasoned that clause (ii) is intended to cover cases where the duty has been borne or paid by a person without an order of assessment — for example, where the importer pays a higher duty in ignorance of a notification permitting concessional duty on filing a bill of entry. The Court found that the present facts fall within clause (ii) because there was no adversarial assessment order or lis that produced an appealable adjudication at the time of payment.
The Court addressed the Tribunal's reliance on the cited precedents (CCE, Kanpur v. Flock and Priya Blue Industries). It accepted that in those cases an assessment order had been passed and that the law prevents a party who failed to appeal such an order from later seeking refund on the ground that the order was erroneous. However, the Court concluded that those precedents are inapplicable to the present case where there was no assessment order to challenge. For these reasons the Court held that a refund claim under Section 27(1)(ii) is maintainable in the circumstances of this case.
Finally, the Court set aside the CESTAT order (which had denied refund on the basis that payment must be pursuant to an assessment order) and upheld the order of the Commissioner of Customs (Appeal) dated 28.1.2005. The matter was remanded to the Deputy Commissioner of Customs (Refund) to examine the merits and decide the refund claim in accordance with law after giving the appellant due opportunity.
Holding and Implications
Holding: The Court held that the refund claim of the appellant was maintainable under Section 27 of the Customs Act, and specifically falls under clause (ii) of sub‑section (1) of Section 27 (i.e., duties "borne by him"). Non‑filing of an appeal against an assessed bill of entry does not, in the absence of an assessment order and a lis at the time of payment, deprive the importer of the right to file a refund claim under Section 27.
Direct consequences: The impugned CESTAT order dated 3.4.2008 was set aside, the order of the Commissioner of Customs (Appeal) dated 28.1.2005 was upheld, and the matter was remanded to the Deputy Commissioner of Customs (Refund) to examine the merit of the refund claim in accordance with law and after providing due opportunity to the appellant.
No broader implications were discussed in the opinion beyond the direct effect on the parties; the Court confined its conclusion to the application of Section 27 to the facts before it and expressly distinguished prior authorities that involved appealed assessment orders.
1. The only issue which arises for consideration in this present appeal is whether an assessee who is entitled for concessional rate of duty pays the higher duty by inadvertence is not entitled to grant of refund of the excess duty paid
HON'BLE MR. JUSTICE A. K. SIKRI HON'BLE MR. JUSTICE VALMIKI J.MEHTA
unless he had filed an appeal against the ‘order’ by which he had deposited the duty on filing of the bill of entry. In other words, the assessee contends that in the present case no ‘order’ has been passed because the assessee simply filed the bill of entry and paid the customs duty in mistake without taking the benefit of the notification No. 6/2002 dated 1.3.2002 due to ignorance. The Customs Excise and Service Tax Appellate Tribunal (CESTAT) has passed an order holding that ‘in pursuance to an order of assessment’ necessarily implies that a payment of duty must be pursuant to an assessment order before a refund in appeal can be asked for under Section 27 of the Customs Act, 1962 (hereinafter referred to as ‘the Act’)
2. We have therefore admitted the appeal and framed the following questions of law:
“ Whether non-filing of appeal against the assessed Bill of Entry in which there was no lis between the importer and the revenue at the time of payment of duty will deprive the importer of his right to file refund claim under Section 27 of the Customs Act, 1962?”
3. Before we proceed to decide the issue, it would be necessary to reproduce the relevant part of the relevant provision, namely, Section 27 of the Customs Act, 1962 which is as under:
“27. Claim for refund of duty.- (1) Any person claiming refund of any duty-
(i) paid by him in pursuance of an order of assessment; or
(ii) borne by him,
may make an application for refund of such [ duty and interest,
if any, paid on such duty] to the [Assistant Commissioner of Customs or Deputy Commissioner of Customs]-
(a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, before the expiry of one year;
(b) in any other case, before the expiry of six months, from the date of payment of [duty and interest, if any, paid on such duty] [in such form and manner] as may be specified in the regulations made in this behalf and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 28C) as the applicant may furnish to establish that the amount of [duty and interest, if any, paid on such duty] in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such [duty and interest, if any, paidon such duty] had not been passed on by him to any other person:
Provided that where an application for refund has been made before the commencement of the Central Excise and Customs Laws (Amendment) Act, 1991, such application shall be deemed with in accordance with the provisions of sub-section
(2)”
4. If therefore we refer to language of Section 27, it is more than clear that the duty which is paid is not necessarily pursuant to an order of assessment but can also be ‘borne by him’. Clause (i) and (ii) of sub-section (1) of Section 27 are clearly in the alternative as the expression ‘or’ is found in between clauses
(i) and (ii). The object of section 27(i)(ii) is to cover those classes of case where the duty is paid by a person without an order of assessment, i.e in a case like the present where the assessee pays the duty in ignorance of a notification which allows him payment of concessional rate of duty merely after filing a Bill of Entry. In fact, such a case is the present case in which there is no assessment order for being challenged in the appeal which is passed under Section 27(1)(i)
of the Act because there is no contest or lis and hence no adversarial assessment order.
5. The Tribunal has referred to the cases of CCE, Kanpur v. Flock (India) Pvt. Ltd. [2000 (120) ELT 285] and Priya Blue Industries Ltd.Petitioner/ v. Commissioner Of Customs (Preventive)) 2004 (172) ELT 145 (SC). In both these cases, referred to by the Tribunal there was an assessment order which was passed and consequently it was held that where an adjudicating authority passed an order which is appealable and the party did not chose to exercise the statutory right of appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that adjudicating authority had committed an error in passing his order. These judgments will therefore not apply when there is no assessment order on dispute/contest, like as is in the facts of the present case.
6. We, therefore, answer the question framed by holding that the refund claim of the appellant was maintainable under Section 27 of the Customs Act and the non-filing of the appeal against the assessed bill of entry does not deprive the appellant to file its claim for refund under Section 27 of the Customs Act, 1962 and which claim will fall under clause (ii) of sub section (1) of Section 27.
7. We accordingly set aside the impugned order dated 3.4.2008 of the CESTAT and uphold the order of the Commissioner of Customs Appeal dated
28.1.2005 and remand of the matter to the original authority viz Deputy
Commissioner of Customs (Refund) to examine the merits of the matter in accordance with law after providing due opportunity to the appellant.
VALMIKI J.MEHTA, J
A.K SIKRI, J
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