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ITC Ltd. Vs. Commissioner of Central Excise, Kolkata IV - (Supreme Court) (18 Sep 2019)

Refund claim cannot be entertained unless order of assessment is modified



Present appeals have been preferred by the Assessees as well as by the Union of India aggrieved by the judgment and order passed by the High Courts and Customs, Excise and Service Tax Appellate Tribunal. The question involved in present appeals is whether in the absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty can be entertained.

The Tribunal has in the case of ITC Limited opined that, unless the order of assessment is appealed, no refund application against the assessed duty can be entertained. On the other hand, while interpreting provisions contained in Section 27 of the Customs Act, 1962, the High Court has opined that when there is no assessment order for being challenged in 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, the cases would be covered by the provision of Section 27(i) (ii) and refund applications can be maintained by the assessee even in the absence of filing appeals against the assessed bill of entry. The High Court of Madras has opined similarly.

Right to appeal is available to any person i.e. to the department as well as to importer/exporter against an order of self-assessment. Until and unless assessment order is modified and a fresh order of assessment is passed and duty re-determined, the refund cannot be granted by way of refund application. The refund authorities cannot take over the role of Assessing Officer. The officer considering refund claim cannot reassess an assessment order. An assessment order has to be questioned within the stipulated period of limitation. The refund application cannot be entertained directly under Section 27 unless the order of assessment is appealed against and is modified.

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.

On considering overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, present Court is of the opinion 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 proceeding. 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 128 or under other relevant provisions of the Act. The order(s) passed by Customs, Excise, and Service Tax Appellate Tribunal is upheld and order passed by the High Courts of Delhi and Madras to the contrary is hereby set aside. The applications for refund were not maintainable. The appeals are accordingly disposed of.


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