CESTAT Orders Refund of Anti-Dumping Duty Paid by Mistake in Self-Assessment; Says Such Payment Has No Legal Sanction
Pranav B Prem
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that anti-dumping duty (ADD) paid due to a clerical error during self-assessment has no legal status as “duty” and is refundable. The Tribunal concluded that when the payment is made without legal sanction, especially in the face of an exemption notification, it cannot be retained by the revenue authorities.
The matter arose from an appeal filed by M/s. Uflex Limited, an importer of aluminium foil, against the rejection of their reassessment and refund applications. The appellant had imported 29 boxes of aluminium foil measuring 6.3 microns in thickness vide Bill of Entry No. 2535627 dated 21.09.2022. While filing the Bill of Entry, the importer mistakenly included Anti-Dumping Duty (ADD) despite Notification No. 51/2021-Cus (ADD) dated 16.09.2021 expressly exempting such imports from ADD. As a result, they paid Rs. 7,14,018/- in excess (comprising Rs. 6,05,100/- as ADD and Rs. 1,08,918/- as differential IGST).
On 12.10.2022, the appellant filed a request for reassessment of the Bill of Entry and simultaneously sought a refund of the excess amount paid. However, the Adjudicating Authority rejected the reassessment request on the ground that such reassessment should be sought through an appeal under Section 128 of the Customs Act. Additionally, the refund claim was rejected by invoking the Supreme Court’s decision in Priya Blue Industries Ltd. v. Commissioner of Customs [2004(172) ELT 145 (S.C.)] and ITC Ltd. v. CCE, Kolkata-IV [(2019)17 SCC 46], which require that the assessment order must be challenged before a refund is entertained.
The appeal before the Commissioner (Appeals) was also dismissed on two grounds: first, that Section 14 of the Limitation Act could not be invoked because the refund application was filed before a competent authority and not one lacking jurisdiction; and second, that reassessment and refund proceedings were distinct causes of action, and time spent pursuing one could not be used to extend limitation for the other.
However, the CESTAT found significant merit in the appellant’s position. The Tribunal noted that the application for reassessment had been diligently filed before the Adjudicating Authority, which then erroneously forwarded it to the appraising officer. This procedural misstep, in the Tribunal’s view, qualified as a defect of jurisdiction akin to what is covered under Section 14 of the Limitation Act. Dr. Rachna Gupta, Judicial Member, observed that "the original adjudicating authority should have decided the application seeking reassessment of BOE," and that forwarding it to an official without jurisdiction was improper.
The Tribunal carefully examined the relevant provisions of the Customs Act and concluded that reassessment under Section 17 is permissible only prior to the clearance of goods for home consumption. Since the goods in question had already been cleared, the proper course was to file an appeal under Section 128. The Tribunal held that the appellant’s action to seek reassessment through the Adjudicating Authority was taken in good faith and thus warranted the benefit of Section 14 of the Limitation Act.
Turning to the merits of the refund, the Tribunal emphasized that the exemption notification clearly applied to the imported goods. Since the excess payment was made under a clerical error and was evident on the face of the Bill of Entry, the Tribunal ruled that such payment could not take on the character of lawful duty. Citing Article 265 of the Constitution, it reiterated that "the authority cannot retain the said amount" when it is not legally authorized to collect it.
Addressing the applicability of the Priya Blue and ITC Ltd. decisions, the Tribunal found them distinguishable. In those cases, the refund was denied because the assessment had not been challenged. However, in the present case, the appellant had, in fact, simultaneously filed for both reassessment and refund. The Tribunal held that the denial of relief on procedural grounds alone was unjustified. It relied on the Supreme Court’s ruling in Ramnath Exports (P) Ltd. v. Vinita Mehta [(2022) 7 SCC 678 : 2022 SCC OnLine SC 788], where it was held that substantive rights should not be defeated by curable procedural defects.
Ultimately, the Tribunal set aside the impugned order and allowed the appeal. It held that the excess amount paid as ADD and differential IGST was refundable, and that denial of the same on technical grounds was not tenable in law.
Appearance
Counsel for Appellant/ Assessee: Lalitendra Gulani
Counsel for Respondent/ Department: M.K. Chawda
Cause Title: M/s. Uflex Limited V. Commissioner of Customs (Import)-New Delhi
Case No: Customs Appeal No. 51897 of 2024
Coram: Dr. Rachna Gupta [Judicial Member]
