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TAXAP/582/2008 7/ 7 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 582 of 2008
With
CIVIL
APPLICATION No. 138 of 2008
In
TAX APPEAL No. 582 of 2008
For
Approval and Signature:
HONOURABLE
MR. JUSTICE D.A.MEHTA
HONOURABLE
MS. JUSTICE H.N.DEVANI
=========================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================
COMMISSIONER
OF CUSTOMS - Appellant(s)
Versus
MILLAT
FIBERS (1OO% EOU) - Opponent(s)
=========================================
Appearance
:
MR AY KOGJE
for Appellant(s) :
1,
NOTICE UNSERVED for Opponent(s) :
1,
=========================================
CORAM
:
HONOURABLE
MR. JUSTICE D.A.MEHTA
and
HONOURABLE
MS. JUSTICE H.N.DEVANI
Date
: 19/03/2010
ORAL
JUDGMENT
(Per : HONOURABLE MS. JUSTICE
H.N.DEVANI)
1. In
this appeal under section 130 of the Customs Act, 1962 (the Act)
Appellant-Revenue has challenged order dated 30th
November, 2007 made by the Customs, Excise and Service Tax Appellate
Tribunal (the Tribunal) proposing the following questions stated to
be substantial questions of law:-
Whether,
in the facts and circumstances of the case, the Tribunal is
justified in rejecting the appeal of the Revenue and confirming the
order of the adjudicating authority on the ground that exercise of
powers under Section 28 of the Customs Act, 1962 cannot be resorted
for recovering the amount of Customs Duty erroneously refunded?
Whether,
in the facts and circumstances of the case, the Tribunal is
justified in confirming the order of the Commissioner (Appeals),
inter alia, holding that examination of the issue in case of
erroneously refunded duty amount under Section 28 of the Customs
Act, 1962 on the Doctrine of Unjust Enrichment would amount to
review of order of the adjudicating authority sanctioning the
refund?
Whether,
in the facts and circumstances of the case, the Tribunal is
justified in confirming the order of the Commissioner (Appeals) who
allowed the appeal of the respondent on the ground not urged in the
memo of the appeal by him?
2. The
respondent herein at the relevant time was holding a licence of 100%
EOU. In connection with alleged illicit clearance of imported
Polyester Filament Yarn show cause notice dated 19.9.2002 came to be
issued against the respondent. The show cause notice came to be
adjudicated vide order-in-original dated 30th October,
2003 whereby interalia, demand of customs duty amounting to
Rs.5,34,695/- was confirmed. In appeal, the Commissioner (Appeals)
held that the adjudicating authority had no jurisdiction to confirm
such a demand and set aside only that part of the order, whereas the
order of confiscation under section 111 of the Act and redemption
fine under section 125(1) of the Act was upheld. As the respondent
had already deposited the duty amount, it made an application for
refund. Vide order-in-original dated 22nd February, 2005,
the claim for refund to the extent of Rs.2,92,585/- came to be
rejected whereas refund of Rs.2,42,110/- came to be sanctioned.
However, it was directed that the sanctioned refund be appropriated
against pending dues.
3. Later
on the adjudicating authority noticed that the doctrine of unjust
enrichment was not verified before sanctioning refund of
Rs.2,42,110/-. He, therefore, issued a show-cause notice dated
07.06.2005 to the respondent as to why the refund which was
sanctioned and erroneously refunded by appropriating the same against
Government dues should not be rejected and the appropriated amount
should not be recovered under section 28 read with section 72 of the
Act in absence of any proof of incidence of duty not being passed on.
The show-cause notice came to be adjudicated vide order dated 15th
February, 2006 whereby the adjudicating authority sanctioned refund
of Rs.2,42,110/- and ordered the same to be credited to the Consumer
Welfare Fund.
4. The
respondent carried the matter in appeal before Commissioner (Appeals)
who, vide order dated 26th June, 2006, held that the issue
of second show-cause notice after having already passed an order
sanctioning refund by the adjudicating authority would amount to
reviewing his own order. That the proper course for the Department
was to review the order under section 129D(2) of the Act and
thereafter, file an appeal under section 129D(4) of the Act. The
Commissioner (Appeals) held that as the order passed by the
adjudicating authority amounts to review of his own order, the same
was not permissible and accordingly allowed the appeal.
5. Revenue
carried the matter in appeal before the Tribunal. The Tribunal
agreed with the reasoning adopted by the Commissioner (Appeals) and
dismissed the appeal.
6. Mr.
A. Y. Kogje, learned Standing Counsel for the appellant revenue
invited attention to the provisions of section 28 of the Act to
submit that where any duty has been erroneously refunded, it is
permissible for the adjudicating authority to serve notice requiring
the concerned person to show cause as to why he should not pay the
amount specified in the notice. It was submitted that while making
the order dated 22nd February, 2005 the aspect of unjust
enrichment had not been considered, hence the refund made pursuant to
the said order could be said to have been erroneously refunded so as
to bring the same within the ambit of section 28 of the Act. It was,
accordingly, submitted that the questions of law as proposed, arise
out of the impugned order of the Tribunal.
7. The
record of the case indicates that vide order dated 22nd
February, 2005, the adjudicating authority had adjudicated on the
claim of refund made by the respondents. At the relevant time, it was
permissible for the adjudicating authority to go into all issues
which were necessary to be looked into for the purpose of deciding
the application for refund, including the aspect of unjust
enrichment. The adjudicating authority after duly considering the
claim of the respondent rejected part of the claim and allowed the
claim to the extent of Rs.2,42,110/- and directed that the same
should be appropriated against outstanding Government dues. Later on
after the said order was implemented another show cause notice came
to be issued calling upon the respondent to show cause as to why the
refund claim of Rs.2,42,110/- sanctioned and erroneously refunded by
appropriating against the outstanding Government dues should not be
rejected and amount so appropriated should not be recovered under
section 28 read with section 27 of the Customs Act, 1962 in absence
of proof regarding burden of duty being not passed on. The very frame
of the show-cause notice indicates that the adjudicating authority
was reviewing the earlier order inasmuch the respondent had been
called upon to show cause as to why the refund granted by the earlier
order should not be rejected.
8. Sub-section
(2) section 129D empowers the Commissioner of Customs to call for and
examine the record of any proceeding in which an adjudicating
authority subordinate to him has passed any decision or order under
the Act for the purpose of satisfying himself as to the legality or
propriety of any such decision or order and to direct such authority
to apply to the Commissioner (Appeals) for the determination of such
points arising out of the decision or order as may be specified by
the Commissioner in his order. Sub-section (4) thereof provides for
preferring an appeal against the order of the concerned authority. In
the circumstances, if the adjudicating authority was of the view that
the doctrine of unjust enrichment had not been examined while making
the order of refund, the proper course to adopt was to take recourse
to the provisions of section 129D. A perusal of the order-in-original
dated 15.02.2006 shows that the adjudicating authority has held that
the refundable amount of Rs.2,42,110/- is required to be credited to
the Consumer Welfare Fund established under section 12 C of the
Central Excise Act, 1944 and that the same cannot be refunded to the
party by appropriating against outstanding Government dues of
Rs.2,75,306/- of Customs Duty vide OIO dated 13.02.2004. Thus in
effect and substance the adjudicating authority, has set aside its
earlier order dated 13.2.2004 whereby the refund amount had been
ordered to be appropriated against outstanding Government dues. The
adjudicating authority has no power or authority under the Act to
reconsider or review or sit in appeal over its earlier order. No
such power or authority has been pointed out by the learned counsel
for the appellant.
9. In
the aforesaid factual background, the Commissioner (Appeals) was
justified in holding that the show-cause notice issued by the
adjudicating authority on the ground of unjust enrichment, would
amount to review of his own order which was not permissible. The view
expressed by the Commissioner (Appeals) that the proper course of
action was for the Department to review the order under section
129D(2) of the Act and thereafter file appeal under section 129D(4)
is in consonance with the provisions of the Act. The impugned order
of the Tribunal whereby it has confirmed the findings recorded by the
Commissioner (Appeals) does not suffer from any legal infirmity so as
to warrant interference. No question of law, much less any
substantial question of law can be stated to arise out of the
impugned order of the Tribunal.
10. The
appeal is accordingly dismissed with no order as to costs.
Civil
Application No.138 of 2008
In
view of the order passed in the main Tax Appeal, this application
would not survive and is disposed of accordingly.
(
D.A. Mehta, J. )
(
Harsha Devani, J. )
hki
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