SC:While refunding customs duty new assessment/reassessment is barred

The Hon’ble Supreme Court, on 18th September 2019, in the matter ofITC Limited v. Commissioner Of Central Excise, Kolkata IV pronounced that the proceedings of refund of customs duty are more or less in the nature of execution proceedings therefore it is not open to the authority which processes the refund of customs duty to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise.

The Hon’ble Supreme Court observed that:

Self-­assessment, provisional assessment, re­assessment and any assessment in which the duty assessed is nil, is an assessment. Assessment includes self­ assessment, when the provision of self­-assessment has been incorporated in Section 17(1) of the Customs Act, 1962, and corresponding change has been made in the definition of assessment in Section 2(2) of the Customs Act. (Para 23)

It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise. (Para 41)

As the order of self-­assessment is nonetheless an assessment order passed under the Customs Act, obviously it would be appealable by any person aggrieved thereby. The expression ‘Any person’ is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of re­assessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-­assessment. The order of self­ assessment is an order of assessment as per section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self­-assessment is not found to be satisfactory, an order of re­assessment has to be passed under section 17(4). Section 128 has not provided for an appeal against a speaking order but against “any order” which is of wide amplitude. (Para 43)

The provisions under section 27 of the Customs Act 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 re­ assessment 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. While processing a refund application, re­assessment is not permitted nor conditions of exemption can be adjudicated. Re­assessment is permitted only under Section 17(3)(4) and (5) of the amended provisions. It will virtually amount to an order of assessment or re­assessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the refund provisions under Section 27. (Para 44)

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 proceedings and 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 self­assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. (Para 47)

Copy of judgement: Judgement_18-Sep-2019

-Tushar Kaushik 

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