HIND AGRO INDUSTRIES LIMITED Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) By the common impugned order dated 22nd May, 2006 the Customs, Excise & Service Tax Appellate Tribunal ('CESTAT) dismissed the Customs Appeal Nos. C/853 and 866 of 2004 filed by the Appellants against a common order dated 26th August, 2004 passed by the Commissioner of Customs (Appeals), Delhi-II under Section 128 (3) of the Customs Act, 1962 ('Act'). By the impugned order, the CESTAT has, while dismissing appeals, held that the customs authorities were justified in rejecting the claim for refund of the cess on meat products deposited erroneously by both the Appellants during the period 15th January, 2001 to 19th February, 2002. The CESTAT held that although the cess was not payable by the Appellants, the refund applications were rightly rejected since they were filed beyond the statutory time limit prescribed under Section 27 of the Act.

(2.) The brief facts leading to the filing of these appeals are that both the Appellants are 100% Export Oriented Units ('EOUs') engaged in the manufacture of meat and meat products. A cess was leviable on meat products in terms of Serial No. 2 of the Schedule to the Agricultural arid Processed Food Products Export Development Authority Cess Act, 1985 ('Cess Act'). The Ministry of Commerce and Industries, Government of India by a notification dated 17th January, 2001 fixed 0% cess for all 100% EOU. It is stated by the Appellants that even prior to the notification fixing 0% cess, the Appellants had been informed by the Export Promotion Council ('Council') that the matter had taken up by the Council with the Government of India for lifting of the cess in respect of export of meat products produced in the EOUs and that the matter was under the active consideration of the Government. The Appellants were accordingly advised to pay the cess under protest. The Appellants submitted a letter dated 3rd January, 2001 to the Commissioner of Customs, ICD, Tughlakabad, New Delhi stating that they were paying cess under protest. It is claimed that the said letter was directly delivered to Refund Section in the office of the Commissioner of Customs on 4th January, 2001. Although the 0% cess notification was issued on 17th January, 2001, the Appellants learnt of the withdrawal of cess only some time in February 2002. Thereafter they obtained a copy of the said notification, and on 17th May, 2002 filed a refund claim under Section 27 of the Act in the prescribed proforma claiming refund of the cess paid during the period 15th January, 2001 to 19th February, 2002. The Appellant, Hind Agro Industries Limited claimed a refund of Rs. 1,42,28,645/- and the other Appellant, Hind Industries Limited, claimed a refund of Rs. 10,86,475/-.

(3.) The Appellants were issued a show cause notice dated 7th August, 2002 by the Deputy Commissioner of Customs (Refund) in which it was stated that the protest under which the payment of cess was made by the Appellants was to no avail since it was a demand for abolition of the cess and did not question the leviability of the cess. It was further stated that the claim for refund had been filed beyond the limitation stipulated under Section 27 of the Act. The Appellants replied to the show cause notice on 23rd August, 2002 pointing out that the payment of cess by them had to be treated as a deposit and that Section 27 was not applicable. A further letter was sent to the Appellants by the Department on 27th December, 2002, inter alia, asking them to show cause why the claim should not be treated as a claim under Section 26 of the Act and why it should not be credited to the Consumer Welfare Fund. This was followed by an oral hearing resulting in an order dated 1st April, 2003 issued by the Assistant Commissioner (Refund) rejecting the refund claim on the ground that it was for a period beyond six months prior to 17th May, 2002, i.e. prior to 17th November, 2001 and therefore beyond the time limit stipulated under Section 27. It was held that the claim was hit by the doctrine of unjust enrichment inasmuch as the Appellants had failed to show that the burden of the cess had not been passed on to the buyers. As regards the claim made by Hind Agro Industries Limited, a refund of the claim only to the extent of Rs.33,67,964 was admitted but even the said sum was directed to be credited to the Consumer Welfare Fund. As regards the Hind Industries Limited, the claim for refund was limited to a sum of Rs.4,97,937 and this sum was also directed to be credited to the Consumer Welfare Fund. The Assistant Commissioner held that no reliance could be placed on the letter dated 17th January, 2001 and that in any event the protest was deemed to be finalized on 17th January, 2001, the date on which the notification was issued. On that basis it was held that the refund application should have been filed within six months thereafter in terms of Section 27 (1) of the Act.