HPCL Vs. COMMISSIONER OF CUSTOMS, KANDLA

JUDGEMENT

(1.) INDIAN Oil Corporation Ltd. (IOCL) the nominated canalizing agency during the relevant period sold 1,995.932 MT of HSD on 28 -10 -96 to HPCL the appellant in this case and HPCL filed an ex -bond bill of entry on 30 -10 -96 for the clearance of this HSD and paid customs duty of Rs. 78,16,301/ -. However subsequently on being informed that the HSD sold to HPCL was not imported one but of indigenous origin, the HPCL filed a fresh D -3 declaration on the basis of a fresh AR -3A issued on 14 -11 -96 by IOCL showing the HSD in question as of indigenous origin. After filing D -3 declaration, HPCL also paid central excise duty amounting to Rs. 24,01,593/ - on 18 -11 -96 and thereafter filed a refund claim on 7 -2 -97 since HPCL had paid duty on the same consignment twice; first time customs duty and second time central excise duty. The refund claim filed in respect of customs duties by HPCL was rejected on 27 -6 -02 on the ground that HPCL had not produced necessary documents in support of the claim and on an appeal filed by HPCL, Commissioner (Appeals) remanded the matter to the original adjudicating authority directing HPCL to produce documents as prescribed under public notice No. 15/95 dated 4 -5 -95. Accordingly HPCL submitted all the relevant documents and on 1 -6 -05, the Assistant Commissioner passed an order sanctioning the refund claim. Department filed an appeal before Commissioner (Appeals) on the ground that the sanction of refund was not legal and proper since the assessment of bill of entry under which customs duty was paid was not challenged relying upon the decision of the Honble Supreme Court in the case of Priya Blue Industries reported in 2004 (172) E.L.T. 145 (S.C.). The Commissioner (Appeals) in the impugned order allowed the appeal filed by the department and the appellant is before us.

(2.) LEARNED advocates on behalf of the appellants submitted that the reliance of the Commissioner (Appeals) on the decision of the Honble Supreme Court in the case of Priya Blue Industries was misplaced in view of the fact that in this case the refund claim was not based on the assessment at all but was on the basis that on the same consignment duty had been paid twice. It was also submitted that the mistake happened because IOCL had wrongly informed the appellant that HSD supplied on 28 -10 -06 was of imported origin whereas the clarification that it was of indigenous origin was received after fifteen days by which time the duty had already been paid. In reality what happened was, the appellant had received HSD of indigenous origin from IOCL (as clarified subsequently) but paid duty on the assumption that it was of imported origin. Subsequently the issue was regularized by filing a fresh D -3 declaration, submission of AR -3A and payment of duty applicable as per central excise law. There was no need to challenge the assessment since the rate of duty, value and quantity mentioned in the bill of entry were all correct except for the fact that there were no goods. The assessment is to be challenged only when there is a dispute regarding rate of duty, valuation etc. It was also submitted that a totally new ground has been accepted by Commissioner (Appeals) which was not the subject matter of show cause notice at all and there was no proposal for rejection of refund claim on the ground that assessment was not challenged. Further it was also submitted that a totally new ground cannot be taken in view of the fact that the remand order passed by the Commissioner (Appeals) earlier directing the Assistant Commissioner to consider refund claim and the appellant to produce the relevant documents has not been challenged. It was also submitted that filing of refund claim itself is a challenge of assessment of bill of entry and hence refund claim is admissible.

(3.) LEARNED DR on the other hand submitted that in the initial stage the refund claim was rejected on the ground that the documents were not submitted. In the second round, the Assistant Commissioner sanctioned the refund. If an issue is not raised in the show cause notice and subsequently an order is passed on that basis, it cannot be said that department cannot take up a new ground especially the one which is a legal ground. He submitted that the appeal filed by the department that refund claim should have been rejected because of the decision of the Honble Supreme Court for non -challenge of bill of entry assessment was a legal ground and therefore can be legitimately taken up even at a subsequent stage and therefore the decision of the Commissioner (Appeals) accepting such a ground and passing an order cannot be found fault with. Further he also submitted that even if the assessment was correct, the proper course for the party was to apply for cancellation of bill of entry and file a refund claim thereafter.