Gowri Shankar, Member (T)
1. The question for consideration before us in this appeal is the eligibility to refund of customs duty paid by the appellant on the importation of four consignments.
2. The claims are on two different counts. Rs. 2,60,125 was claimed as refund of duty paid on bill of entry dated 5.3.1990 rotation No. 107, Line No. II (referred to either as bill of entry No. E-1308 or 1338) filed for the goods carried on vessel ‘State of Nagaland’. The refund claim was filed on the importer contending that excess freight was paid by mistake to the carrier. The freight bill amended by the carrier M/s. Shipping Corporation of India showing the lower freight of Rs. 13,077 was produced. The claim has been rejected on the ground that worthwhile evidence of actual freight was not produced. We are unable to accept this reason. The certification by the carrier of the goods by way of amendment to the freight bill showing the actual freight paid would itself, in our view, constitute sufficient evidence of freight. After all it is on the freight bill as issued by the carrier that the Custom House relies upon as evidence for the purpose of assessment. Rejection of the claim on this score cannot be upheld.
3. The other three claims related to imported goods found short during examination. The examination report for the consignment of 25 cases covered by the bill of entry 5908 dated 23.12.1990 shows that two cases were completely empty. The report for bill of entry number 5402 dated 5.9.1990 shows that one case covered by the bill of entry was broken and are only 512 pieces of the contents of instead 800. The examination of goods covered by bill of entry 5065 dated 5.10.1990 shows that the quantity of goods found short, with their description, has been indicated in the examination report.
4. The claim for refund of duty paid on these has been rejected on the grounds that Section 13 of the Act will not apply as this is not a case of pilferage and Section 23 will not apply because the goods were not examined in the presence of the carrier or its representative and therefore it cannot be shown that the damage or the loss of contends was present when the goods were loaded on board the ship. The Collector (Appeals) further seems to suggest because the appellant paid the duty initially claim for refund will not lie and claim for remission under Section 23 will not lie.
5. We are unable to accept any of these grounds. Section 13 of the Act provides that no duty shall be paid by the importer for such goods by the importer, if they are pilfered after their unloading thereof and before the proper officer has made and order for clearance for home consumption or deposit in a warehouse. Section 23(1) provides for remission of duty on any goods, which are lost or destroyed or abandoned at any time before clearance for home consumption otherwise as a result of pilferage. Therefore unless it is shown that the loss is the result of pilferage provisions of Section 23(1) will apply. The provisions of Section 13 will apply if the loss is due to pilferage unless it can be shown that the pilferage took place prior to the unloading of goods. We have already stated that the two cases in one of the case referred to were completely empty. In that situation if the shortage took place earlier the matter would have come to the notice of the Port Trust authorities and brought into notice. This has not been done. It appears reasonable to conclude in these facts therefore that the shortage was occurred after the goods were unloaded. The basis for denying the claim is therefore not justified.
6. On merits therefore the appellant was entitled to refund on both these counts.
7. The question whether by application of Sub-section (2) of Section 27 of the Act refund is to be paid to the appellant or to be credited to Consumer Welfare Fund. The advocate for the appellant says that the assessments were provisional and relies on paragraph 67 of the Supreme Court judgment in Mafatlal Industries Ltd. v. Union of India . This paragraph contains the majority view that any refund consequent upon finalisation of provisional of assessment ordered under Rule 9-B of the Central Excise Act will not be covered by Section 11A of the Act. We accept that the provisions of Sub-section (2) of Section 18 of the Customs Act, 1962 are in para materia with the provisions of Rule 9B(5) and this view would apply equally to finalisation of provisional assessment under the Customs Act. The reason behind this paragraph of the Court’s judgment appears to be that the provisions of Sub-section (2) of Section 11B of the Central Excise Act would only apply to refunds made on a claim filed under Sub-section (1) of that section. Rule 9B is independent of these provisions and Section 11B(2) will not apply. The same reason would hold true with equal force with the assessment under Customs Rules. However, the question is whether the refund that we are concerned with are the result of the finalisation of the provisional assessment. We are told by the advocate for the appellant that the provisional assessment was ordered because of an apparent relationship between the supplier of the goods and the importer, giving rise to doubts of the acceptability of the transactional value. The claim for refund arises either on account of excess freight or shortage in the goods imported and was therefore entirely unconnected with any issue having to do with the provisional assessment. Whatever be the value of the goods that is finally determined whatever the consequence, the claims for refund on these two counts would subsist.
8. The contention that the provisional assessment is provisional for all purpose is no answer, and indeed indequate. The decisions of the Tribunal in Castrol (India) Limited v. CCE ; Kerala State Electric Lamp Works Ltd. v. CCE and CCE v. PMT Machine Tool have held that where assessment is provisional for any specific purpose it continues to be provisional for all other purposes. There could be no quarrel with this proposition. Therefore it was held in CCE v. PMT Machine Tools that a claim for refund on a ground of incorrect classification should be filed within six months from the date of finalisation of assessment notwithstanding the assessment ordered to be provisional to determine valuation. In Kerala State Electric Lamp Works Ltd. v. CCE the Tribunal took the view that claim for refund arising out of the issue as to whether the assessee was related to another or not, would not be barred by limitation solely because the assessment order was provisional only for finalising the issue of post manufacturing expenses. It will be noticed that in both these cases, the central issue was limitation. Each of the decisions held that for the purpose of applying the limitation in a case where goods are provisionally assessed, each of them has held that the period of six months provided in Section 11-B for claiming refund will commence to run only from the date on which the provisional assessment is finalised notwithstanding that the claim for refund may have arisen on a different ground that the one on which provisional assessment was ordered. Neither of them has said, nor has any other decision of the Tribunal that we are aware, that provisional assessment is provisional for all purposes whatsoever. In our view, this would not in any event would hold true in cases where the refund is entirely unconnected with the provisional assessment. Whatever the value arrived or the question determined the applicant’s claim continue to subsist and was required to be entertained. The claim for refund of the duty paid in excess of the freight or of the goods found short will necessarily have to be considered and determined independently of the assessment and the value of the goods. The value of the goods will either be related to the extent that the actual duty payable and therefore the duty refundable will only be known after the assessment is finalised. The refund claims would have arisen even if there was no provisional assessment or, as we have reiterated, irrespective of whether the provisional assessment is finalised. The refund thus does not arise as a result of finalisation of provisional assessment. The refund will therefore be subject to the provisions of Sub-section (2) of Section 27. We are unable to say on the basis of the Chartered Accountant’s certificate that the incidence of duty has not been passed on to any other person. We, however, note the contention of the advocate for the appellant that he will be able’to show before the Assistant Commissioner evidence that incidence of duty has not been passed on.
9. Accordingly these appeals are allowed to the extent of the refund payable as claimed by the appellant and for the reasons mentioned above we remand the matter to the Assistant Commissioner to determine in the light of the evidence produced by the appellant within two months from the receipt of this order whether the amount should be refunded to the appellant or credited to the Consumer Welfare Fund.