Commissioner of Customs vs Kabadi Chikkanagusa and Sons

D.V. Shylendra Kumar, J.—Appeal by the Commissioner of Customs against the order passed by the CESTAT wherein the Tribunal took the view that an effort on the part of the Department to recover any excess refund to the tune of Rs. 2,30,687/- as amount wrongly refunded in terms of the earlier order passed on refund claim and refunded in terms of cheque dated 15-9-1999 for a sum of Rs. 2,30,687/- through its authorised Custom House agent M/s S. Natesa Iyer & Co who incidentally had also functioned as the agent for the clearance of the goods at the time of import, was barred by the period of limitation as prescribed in Section 28 of the Customs Act 1962.

The refund claim had been made by the importer, who had earlier imported certain weaving machines which was used in the manufacturing activity of the importer and for which a total duty of Rs. 16,88,555/- had been paid in terms of bill of entry dated 31-3-1999.

The Assessing Officer who had allowed the refund was of the view that it was erroneously refunded and sought to reclaim the amount and for such purpose initiated proceedings invoking the provisions of Section 28 of the Customs Act and a notice dated 14-3-2000 was served on the Custom House Agent who had acted as authorised agent for the importer for the purpose of making a refund application. The agent, it appears, received a notice without any demur.

It also appears that the revenue had followed up by issuing a notice to the importer also, and the very notice dated 14-3-2000 served on the importer on 3-4-2000.

The importer caused a reply to the notice u/s 28 in terms of reply dated 4-4-2000 acknowledging the receipt of the notice and affirming the receipt of the refund amount The Assessing Officer who examined the reply caused by the importer, was of the view that the refund had been wrongly allowed and therefore passed an order directing the recovery of the wrongly refunded amount as per the order dated 31-10-2000 as per Annexure-''D''.

Aggrieved importer, appealed to the Commissioner of Customs (Appeals) and raised the plea of limitation i.e., the notice u/s 28 said to have been received by the importer on 3-4-2000 to have been time barred being beyond the period of six months and therefore the revenue was not entitled to reclaim the wrongly refunded amount assuming that it was so and as being barred by limitation. Incidentally, the assessee/importer had also urged that in fact the refund had not resulted in any unjust enrichment. However, on the part of the revenue the attempt to reclaim the refund amount was on the premise that the refund, of the amount would not have been possible ii it should have been tested on the touch stone of doctrine of unjust enrichment.

The Appellate Commissioner apart from answering the grounds raised against the importer also found that the reopening of the proceedings u/s 28 of the Act was also not time barred as though the importer might have received the notice dated 14-3-2000 only on 3-4-2000 but the importer''s agent who had acted as their agent for the purpose of making the application for refund had received the notice on 14-3-2000 and if it should be taken to be a notice on the importer also, the proceedings u/s 28 is not barred by limitation.

It is in this view of the matter the Appellate Commissioner dismissed the appeal.

The aggrieved importer appealed further to the Appellate Tribunal, CESTAT and in support of the appeal contended that the ratio of the decision of the Supreme Court in the case of Collector of Customs, Cochin Vs. Trivandrum Rubber Works Ltd., . It is relevant to quote paragraph 8 of the said judgment which is as follows:

In the present case, notice has been given u/s 28 to the owner/importer as a person chargeable to duty. The notice must, therefore, be served on the owner/importer. A service on the clearing agent of the owner/importer long after the clearing agent has ceased to deal with the goods in question under the Customs Act, cannot be treated as valid service of notice on the owner/importer.

It was urged that a notice on a person who was not specifically authorised for the purposes of the proceedings is not a notice on the importer and the mere fact that the importer had on an earlier occasion availed the services of the Customs Agent and used him as his agent does not mean that the Customs agent had remained an agent for all time. That with the issue of refund order and cheque they received by the agent and passed on to the Customer, the authorisation came to an end and therefore service of notice issued u/s 28 of the Act on such a person as on 14-3-2000 was not proper service on the importer in the eye of law.

This contention of the appellant assessee before the Tribunal found acceptance and therefore the Tribunal allowed the appeal and set aside the order of assessment for the recovery of the refund amount. It is the turn of the revenue now to come before this Court with the order of the larger Tribunal as wrong as the Tribunal would not have construed that the notice issued to the agent of the very importer is not good enough notice to the importer.

Appearing on behalf of the appellant Smt. Veena Jadhav, the Central Government Standing Counsel submits that the Tribunal has committed an error in coming to the conclusion that the notice issued on the clearance agent who had earlier acted as an agent for the purpose of refund application, who in fact had received the cheque is not. good enough notice for the purpose of taking it as a notice on importer that the authorisation which had been specifically issued in favour of the agent M/s Natesh Iyer & Co., was one in connection with the application for refund and a proceeding like the present one u/s 28 being in furtherance of the very proceedings of the refund amount, it is to be taken that the service on the very agent is good enough service on the importer also. Therefore the Tribunal is in error in coming to the contrary conclusion.

It is also submitted that the importer who received the very notice dated 14-3-2000 albeit on 3-4-2000 never raised the plea of limitation either in the reply dated 4-4-2000 to the show-cause notice or before the Tribunal. It is only for the first time the appellant came up with the contention that the recovery proceedings notice u/s 28 was barred by limitation. Submission is that even though a ground of limitation was raised it was not on such premise before the First Appellate Authority, the notice on the agent was not good enough notice on the importer. Therefore it was barred by limitation.

With reference to the judgment relied upon by the Tribunal learned standing counsel would submit that the judgment is not applicable to the present case particularly as the judgment was rendered in the context of recovery of short levy of duty and not refund as in the present case more so when the cheque pursuant to the refund order was received by the agent himself and the proceedings are only because of the issue of the cheque by way of refund.

Countering the said submission Sri Rajesh Chander Kumar, learned Counsel appearing for the respondent assessee would submit that the case is covered by the ratio of the decision of the Supreme Court in the case of Collector of Customs, Cochin v. Trivandrum Rubber Works Ltd., than it applies in all fours to the present case that even in the said case the Court found that a notice issued only to the agent which was in time and a belated notice to the importer can, in no way save the limitation for the purpose of Section 28 of the Act. Also submits the notice in fact was not served on the importer himself within the time prescribed by law.

Sri Rajesh Chander Kumar would point out that the reference to the proceedings under the provisions of 147(3) was made by the Supreme Court in the case only to reject the submissions made on behalf of the revenue and the reliance placed by the Counsel for the revenue on the provisions of Section 147(3) would not in any way result in the validity of the notices u/s 28 which was otherwise barred by the period of limitation. Therefore urged that there is no merit in the appeal and the appeal has to be dismissed.

Learned standing counsel for the appellant has placed before us the original records and has drawn our attention to the authorisation letter which had been issued by the importer in favour of the Customs agent dated 30-4-1999 and submits this will definitely amount to the agent being authorised to act on behalf of the importer for all purposes in connection with the refund application in the order and further proceedings and the authorisation can be necessarily be implied even in respect of further proceedings u/s 28 of the Act etc.

We have examined the authorisation letter. It is for the purpose of making the refund application. The authorisation does not in any way indicate that it is a general authorisation which can go on to a large extent than what has been indicated therein. In this regard if this authorisation is one to be construed as an authorisation which is valid on the day when the notice was served on the agent perhaps as good a service on the importer. While the authorisation does not necessarily indicate so, the submission that authorisation can be implied even for the further proceedings u/s 28 of the Act for recovery of wrong refund cannot be accepted for the reason that while in fact the authorisation does not say so. The proceedings u/s 28 of the Act cannot be said as a proceedings which is part of refund application u/s 27. Therefore the argument has to be rejected.

We find that the distinction sought to be raised with the decision of the Supreme Court in Trivandrum Rubber Works Ltd., case was rendered in the contest of short levy and in the present case a situation of excess erroneous refund cannot be accepted for the reason that where for the recovery of short levy or for recovery of erroneous refund of customs duty the provision is the same and the principle and the period of limitation are also the same. Therefore the distinction cannot be made only for the reason that the present is a case of situation involving a refund.

We are of the view that the Tribunal has rightly applied the ratio of the judgment of the Supreme Court in Trivandrum Rubber Works case and in the wake of the observation of paragraph 8 of the judgment of the Supreme Court there was no other way out for the Tribunal and equally so for us. It is therefore this appeal has to be dismissed. Therefore the questions of law as formulated at the time of appeal are answered in the negative and against the revenue.

However, we have to examine another submission made by the learned standing Counsel for the appellant namely that the assessee at the time of receiving the refund amount had given an undertaking to the effect that in the event it is found that the duty incidence had already been passed on to the Customers before making refund claim or receiving refund amount on the principle or on the doctrine of unjust enrichment of the amount for being credited to the Consumer Welfare Fund and in the light of such undertaking, if it is in fact found that the assessee had already passed on the incidence of levy of Customs duty to the customer the amount can be recovered for being credited to the fund. Mr. Rajesh Chander Kumar, learned Counsel for the assessee would submit there is no dispute that such an undertaking having been given the undertaking can be worked in terms of the undertaking and not in terms of the provisions of the Act.

In the wake of such submission we observe that the undertaking given by the assessee being before the 28 proceedings is an independent undertaking, only relating to the refund and can be worked out in accordance with the undertaking and in accordance with law and it will not in any way affect or alter in the wake of this judgment. With this clarification this appeal is dismissed reserving liberty to the authorities under the Act, to independently enforce the undertaking in accordance with the undertaking by putting the assessee on notice for such purpose.