Per : R. BHAGYA DEVI

1. Cisco Systems India Pvt. Ltd (the appellant) had filed refund claim on 5.8.2015 for an amount of Rs.4,18,60,248/- claiming to be the amount excess paid based on the finalisation of the provisional assessments vide Order-in-Original No.694/2014 dated 31.12.2014. The Commissioner (A) vide the impugned order No.130/2018 dated 14.3.2018 held that the Commissioner (A) vide Order-in-Appeal No.260/2016 dated 31.3.2016 had set aside the Order-in-Original No.694/2014 dated 31.12.2014 and hence, the question of refund does not arise. He also stated that the claim was rejected on additional grounds such as non-supply of basic documents like BOE, TR-6 challans, finalisation of PD bond, etc., and also on issue of unjust enrichment. The appellant is in appeal against this order.

2. The learned counsel on behalf of the appellant today submitted that the Order-in-Appeal No.260/2016 dated 31.3.2016 referred by the Commissioner (A) in his impugned order has been set aside by this Tribunal vide Final Order No.20870/2023 dated 18.5.2023. Hence, on merits they are eligible for refund. It is also submitted by them that they had informed the department vide letter dated 14.10.2015 that all the original Bills of Entry/TR-6 challans were with the assessment groups.

2.1 They also placed reliance on the decision rendered in the case of M/s. Mangalore Refinery and Petrochemicals Ltd. vs. Commissioner of Customs, Mangalore: 2015-TIOL-675- HC-KAR-CUS to state that refund application need not be filed by the assessee and it is the duty and obligation of the department to refund the amount ordered

2.2 With regard to unjust enrichment, it is submitted that test of unjust enrichment need not be fulfilled for finalisation of Bills of Entry for the period prior to 2006 as Clause (5) to Section 18 of the Customs Act, 1962 which was inserted vide an amendment with effect from 13.7.2006 which is after the period involved in their refund claims. In this regard, they have placed reliance on the decisions of M/s. Mangalore Refinery and Petrochemicals Ltd. vs. Commissioner of Customs, Mangalore: 2015-TIOL-675-HC-CUS and Indian Oil Corporation vs. Commissioner of Customs, Trichy: 2015- TIOL-1079-CESTAT-MAD.

3. The Authorised Representative on behalf of the Revenue fairly admits that the issue on merits has been finalised vide Final Order No.20870/2023 dated 18.5.2023 by this Bench, however, he requests the Bench to remand the matter for verification of the documents as stated by the Commissioner (A) in the impugned order.

4. We have heard both sides. It is on record that vide Final Order No.20870/2023 dated 18.5.2023. The earlier Order-inAppeal No.260/2016 dated 31.3.2016 referred by the Commissioner (A) in the impugned order is based on which refund was rejected his order has been set aside based on which he has rejected the refund claim. Hence, on merits the appellant is eligible for the refund of the excess amount paid as per Orderin-Original No.694/2014 dated 2012.2014 for the period April 2002 to March 2003

5. The second issue is non-submission of the documents. As extracted above, it appears that all the documents that have been called for has been submitted by the appellant to the assessment group on 14.10.2015. The letter addressed to the Superintendent of Customs, Refund (Section), Bangalore is placed below:

6. With regard to unjust enrichment, Section 18(5) is reproduced herein below:

"Section 18 - Provisional assessment of duty:

…….

……

(5) The amount of duty refundable under sub-section (2) and the interest under sub-section (4), if any, shall, instead of being credited to the Fund, be paid to the importer or the exporter, as the case may be, if such amount it relatable to –

(a) the duty and interest, if any, paid on such duty paid by the importer, or the exporter, as the case may be, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;

(b) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use;

(c) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid or such duty to any other person;

(d) the export duty as specified in Section 26;

(e) drawback of duty payable under Section 74 and 75."

6.1 In the case of M/s. Mangalore Petrochemicals Pvt. Ltd.: 2015-TIOL-675-HC-CUS the Hon’ble High Court of Karnataka has held that:

“8. The substantial question of law that arises for our consideration in these appeals is :

Whether the doctrine of unjust enrichment inserted by way of subsection (5) of Section 18 of the Act with effect from 13-7-2006 was applicable to refund under Section 18 prior to the amendment in view of Section 27(2) of the Act

9. Section 18 of the Act reads as under :

18. Provisional assessment of duty. –

(1) Notwithstanding anything contained in this Act but without prejudice to the provisions contained in section 4 –

(a) where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or

(b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or

(c) where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty, the proper officer may direct that the duty leviable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty finally assessed and the duty provisionally assessed.

(2) When the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then –

(a) in the case of goods cleared for home consumption or exportation, the amount paid shall by adjusted against the duty finally assessed and if the amount so paid falls short of, or is in excess of, l [the duty finally assessed], the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be;

(b) in the case of warehoused goods, the proper officer may, where the duty finally assessed is in excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty. 2[(3) The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order under sub-section (2), at the rate fixed by the Central Government under Section 28AB from the first day of the month in which the duty is provisionally assessed till the date of payment thereof.

(4) Subject to sub-section (5), if any refundable amount referred to in clause (a) of sub-section (2) is not refunded under that subsection within three months from the date of assessment, of duty finally, there shall be paid an interest on such unrefunded amount at such rate fixed by the Central Government under section 27A till the date of refund of such amount.

(5) The amount of duty refundable under sub-section (2) and the interest under sub-section (4), if any, shall, instead of being credited to the Fund, be paid to the importer or the exporter, as the case may be, if such amount is relatable to -

(a) the duty and, interest, if any, paid on such duty paid by the importer, or the exporter, as the case may be. if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;

(b) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use;

(c) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;

(d) the export duty as specified in section 26;

(e) drawback of duty payable under sections 74 and 75.]

Section 18 of the Act deals with the provisional assessment of duty. Section starts with a non-obstante clause and the only exception being Section 46. It provides for provisional assessment and a proper officer directing the assessee to pay the duty leviable on such goods, be paid on provisional assessment, subject to the condition that the assessee shall pay the duty as may be finally assessed. Sub-section (2) provides when the duty leviable on such goods is assessed finally in accordance with the provisions of the Act and the amount paid on such provisional assessment is in excess of the duty finally assessed, the assessee shall be entitled to the refund. Therefore, the obligation is cast on the Revenue to make refund of the excess duty paid and collected.

10. Section 27 of the Act provides for claiming of refund of duty. It relates to a claim for refund of duty or interest paid by the assessee or borne by him in a case not falling under the provisional assessment. Sub-section (2) of Section 27 of the Act provides that any excess duty so paid after such determination shall be credited to the Fund. The proviso may be in exception instead of crediting to the Fund, the said amount is payable to the assessee, if the said amount does not fall within any of the categories mentioned in (a) to (f) of the said proviso. One such instance where the assessee was not entitled to refund was where he had already passed on the burden of duty on the customer. That is, if it is refunded to him, it would be a case of unjust enrichment. Such a provision was conspicuously missing in Section 18 of the Act. It is by way of amendment which came into effect from 13-7-2006 the said provisions contained in sub-section (2) of Section 27 of the Act was added to Section 18 by way of subsection (5). If for a claim under Section 18 of the Act, if an assessee has to putforth a claim under Section 27 of the Act, there was no necessity for the parliament to introduce sub-section (2) of Section 27 of the Act by way of sub-section (5) of Section 18 of the Act. It only demonstrates Sections 18 and 27 are merely exclusive. Section 27 applies to a case of constitutional levy, illegal levy or a levy by mistake as held by the Apex Court in the case of Mafatlal Industries Ltd. v. Union of India reported in 1997 (89) E.L.T. 247 (S.C.). Section 18 does not fall within any of those claims. By way of provisional assessment, the duty is paid subject to the condition that after final assessment, he would pay any additional levy and if the payment of duty is in excess of what is actually determined, then he would be entitled to the refund. To claim refund under Section 18 of the Act, the assessee was not expected to invoke Section 27 of the Act. Refund under Section 18 of the Act is independent of refund under Section 27 of the Act. It is for this reason when the Parliament wanted to prevent unjust enrichment, they amended Section 18 of the Act and introduced by way of sub-section (5) what is contained in sub-section (2) of Section 27 which includes unjust enrichment. Therefore, it follows prior to the amendment, this doctrine of unjust enrichment was not attracted to refund claim under Section 18 of the Act.”

(Emphasis supplied)

6.2 The Larger Bench in the case of Commissioner of Customs, Kandla vs. M/s. Hindustan Zinc Ltd.: 2009-TIOL-484- CESTAT-AHM-LB held that:

“7.4 In the case of Section 18 and Section 27, the provisions relating to provisional assessment were always there in Section 27 and Section 18 was amended only in 2006. The Hon'ble Gujarat High Court in Hindalco case considered this issue in detail. The observations of the Hon'ble Gujarat High Court as regards Section 18 prior to the amendment and after the amendment in Para 16 and 18 of the judgment are very relevant and therefore are reproduced below:

"16. On a plain reading it becomes apparent that the said section overrides other provisions of the Act except provisions of Section 46 of the Act and permits provisional assessment of duty in case any of the three contingencies provided by clauses (a), (b) or (c) under sub-section (1) of Section 18 of the Act happening; in such an eventuality the proper officer is entitled to provisionally assess the duty leviable on imported goods pending the production of necessary documents, or furnishing of requisite information, or completion of necessary test or enquiry, subject to importer furnishing such security as the proper officer deems fit for the payment of deficiency, if any, between the duty finally assessed and the duty provisionally assessed. Under sub-section (2) of Section 18 of the Act, it is provided that when duty is assessed finally in accordance with the provisions of the Act then the amount paid shall be adjusted against duty finally assessed, and in case the amount paid falls short of the duty finally assessed, or the amount paid is in excess of the duty finally assessed, the importer shall pay the deficiency, or shall be entitled to the refund, as the case may be.

18. On a plain reading it becomes apparent that sub-sections (3) and (4) relate to liability to pay interest or entitlement to claim interest consequent upon final assessment order. However, sub-section (5) is the material amendment which indicates that the Proviso appearing below sub-section (2) of Section 27 of the Act has now been incorporated as a part of Section 18 of the Act. On a plain reading the distinction between Section 18 as it stood prior to amendment i.e. upto 12-7-2006 and subsequent to the amendment i.e. with effect from 13-7-2006 becomes apparent. The difference is stark and revealing and it is not possible to agree with the contention of revenue that such amendment has to be understood as clarificatory in nature. This is more so, when one reads the amendments made in 1998 and the amendment made in Rule 9B of the Central Excise Rules in 1999 considering the pronouncement of the Apex Court as to the distinction between making of a refund and claiming of a refund; the amendment cannot be considered to be retrospective in nature; and cannot be made applicable to pending proceedings."

The Hon'ble High Court observed that amendment is not clarificatory in nature and amendments are to be considered in the light of the pronouncements of the Apex Court as to the distinction between making of the refund and claim of the refund. Therefore, the High Court came to the conclusion that when provisional assessment is finalized, the assessee is entitled to refund and he does not have to make the claim. Therefore, the provisions of Section 27 is not attracted.

…..

8. In view of the above discussion, there is no doubt that prior to 13.7.2006, refund, which became due on final assessment is to be made without the claim being submitted by the assessee and therefore, did not attract the provision of unjust enrichment. The reference made by the divisional Bench is answered in favour of the respondent.”

7. For the reasons discussed above, the matter is remanded to the original authority only to the limited extent of verification of the documents like BOE, TR-6 challans, finalisation of PD bond, etc., which appears to be have been submitted by the appellant to the assessment group and the appellant will also cooperate in providing all the documents wherever necessary. A reasonable opportunity of hearing may be granted to the appellant before the issue of refund is finalised.

8. Appeal is allowed by way of remand.