OIL AND NATURAL GAS CORPORATION LTD. Vs. COMMISSIONER OF CUSTOMS
LAWS(CE)-2015-1-156
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 27,2015

OIL AND NATURAL GAS CORPORATION LTD. Appellant
VERSUS
COMMISSIONER OF CUSTOMS Respondents




JUDGEMENT

RAMESH NAIR,MEMBER (J) - (1.)THIS appeal is directed against Order -in -Appeal No. 958/MCH/AC/GR.IV/2012, dated December 4, 2012 passed by the Commissioner of Customs (Appeals), Mumbai Customs Zone I. In the impugned order, the learned Commissioner (Appeals) set aside the order -in -original and held that refund claim survives as on date and may be finalised after proper verification of requisite documents. The fact of the case is that the appellant entered into turnkey project with NKK Corporation, Tokyo, Japan for setting up a production platform at Bombay High (co -ordinates 19 degree, 21 minutes, 0.5044 seconds(N) and 71 degree, 18 minutes, 17.4850 seconds(E), hereinafter referred to as the ICG project). The ICG project is located in the exclusive economic zone of India but falls outside the designated area in the continental shelf as declared by the Government of India in the Ministry of External Affairs S.O. No. 429(E), dated July 18, 1986 effective from January 15, 1987. The Central Government had vide Notification No. 11/1987 -Customs, dated January 14, 1987 extended the Customs Act, 1962 and the Customs Tariff Act, 1975 to the designated areas referred as above. In the view of the said ICG project not falling within the designated area, the Central Board of Excise and Customs in consultation with the Ministry of Law, clarified vide Circular No. 28/1995 -Customs, dated March 28, 1995, that, -
"(i) Any goods brought directly from a foreign country to the said ICG project for construction of the project would not attract customs duty.

(ii) The ICG project of M/s. ONGC Ltd. did not fall within the designated area."

Ministry of Finance, Department of Revenue, Central Board of Excise and Customs vide its letter F. No. 450/65/92 -Customs -IV, dated September 18, 1994 had further clarified the issue in consultation with the Ministry of Law and Ministry of External Affairs that if a drilling rig is brought from a foreign country to a place in exclusive economic zone for exploring/exploitation of oil, it would not constitute import for the purpose of the Customs Act, 1962 and no duties can be levied on such rig/equipment in the zone outside the designated areas and beyond the territorial water of India. M/s. NKK Corporation (contractor) supplied a consignment of equipment and material for ICG Project to M/s. ONGC, vide invoice No. NKK -SI -001, dated October 28, 1989 for use in construction of the said ICG project which was brought directly to the project site for installation. In terms of the above mentioned statutory provisions, the consignment did not attract customs duty. However, the appellant filed bill of entry No. 2824/1, dated November 10, 1989 in respect of the goods referred above. The said goods were assessed to the duty of Rs. 34,44,691 and the duty was paid vide cash No. 1668, dated December 18, 1989, since in terms of the statutory provisions mentioned above and the imported goods eligible for exemption of duty the appellant filed refund claim with the Assistant Collector of Customs in charge refund Department for the entire duty paid erroneously. The original authority vide Order -in -Original No. S/6 -Group -IV -14/90R, dated August 21, 1995 rejected the claim on the ground that the appellant has not submitted (a) duplicate copy of bill of entry (b) location certificate from the Ministry of External Affairs, to prove that the same co -ordinates do not fall in the customs area. The refund claim also rejected on the ground that the appellant had not proved that incident of duty paid by them had been passed on to any other person and failed to satisfy doctrine of unjust enrichment. The appellant filed an appeal before the Commissioner (Appeals), who vide Order No. 205/1999/AP -Misc. (Sea), dated February 11, 1999 remanded the case to the lower authority for de novo consideration with the following findings :

"It is observed that lower authority rejected the appellant's claim in absence of certain documents, which the appellant now is in possession. In view of this, I remand the case back to lower authority for de novo consideration with direction that the appellant be granted an opportunity to present their case before lower authority within 30 days form the receipt of this order."

In de novo adjudication which was supposed to be completed within one month as per the Commissioners (Appeals)' order, the Assistant Commissioner of Custom (Import), Gr. IV, new custom house took more than 12 years for passing the de novo adjudication order No. 1149/AC/Gr. IV/AK/2011 -12, dated January 10, 2012, wherein the refund was once again rejected on the ground of non -submission of various original documents. However, in the de novo adjudication it was recorded that customs duty paid on the subject goods was not leviable and same has been applied for refund by the applicant.

Aggrieved by the above rejection order dated January 10, 2012, the appellant filed the appeal before the Commissioner of Customs (Appeals), Mumbai Zone I, who vide Order -in -Appeal No. 958/MCH/AC/Gr -IV/2012, dated December 4, 2012 though set aside the rejection order of the lower authority and held that refund claim survives as on date and may be finalised after proper verification of requisite documents. In the said order -in -appeal the Commissioner (Appeals) directed that sanctioning authority shall maintain the ratio of the case law of : [2000] 120 ELT 285 (SC) Flock (India) P. Ltd., : [1998] 111 STC 467 (SC) : [1997] 89 ELT 247 (SC) Mafatlal Industries Ltd. v. Union of India and : [2004] 3 RC 441 : [2004] 172 ELT 145 (SC) Priya Blue Industries Ltd. v. Commissioner of Customs. Aggrieved with the above order -in -appeal the appellant is before me.

Shri V.B. Dhar, the learned consultant for the appellant, submits that as regard the merit of the case there is no dispute between the Revenue and the appellant as in earlier orders, it has been admitted that payment of duty for which refund is sought for was not payable. Therefore, the Commissioner (Appeals) in the remand order wrongly directed the lower authority that the ratio of cases of Flock (India) : [2000] 120 ELT 285 (SC) and Priya Blue Industries Ltd. : [2004] 3 RC 441 to be maintained. The Commissioner (Appeals) has not discussed or given any finding how the case of Flock (India) : [2000] 120 ELT 285 (SC) and Priya Blue Industrial Ltd. : [2004] 3 RC 441 are applicable in the present case. The learned counsel further submits that in the present case the goods in respect of which bill of entry was filed and customs duty was paid were never imported as the same were directly gone out of Indian territory of water. It is his submission that since the goods have not reached to the customs territory even though bill of entry was filed but goods were not available for assessment. Hence in the present case it could not be said that assessment in terms of section 17 of the Customs Act has taken place. He submits that the assessment of imported goods can only be done if goods are presented for assessment. Since the subject goods had never entered into customs frontier, which is admitted fact even in the impugned adjudicating authority's order dated January 10, 2012, the goods were never imported and could not have been assessed by Customs in terms of section 17 of the Customs Act. It is his submission that due to the above reason it cannot be treated that there is assessment order which should have been challenged. He further submits that the issue of challenging the assessment has never been raised in earlier two adjudication order and the Commissioner (Appeals) order in this very case; therefore, there was no reason or change of circumstances in directing the lower authority to maintain the ratio of Flock (India) : [2000] 120 ELT 285 (SC) and Priya Blue Industries Ltd. : [2004] 3 RC 441 cases. He further submits that as per all the previous proceedings in this case, it is admitted fact that there is no lis between the appellant and the Revenue as regard duty being not payable on the subject goods. He placed reliance on : [2010] 250 ELT 30 (Delhi) Aman Medical Products Ltd. v. Commissioner of Customs wherein the hon'ble High Court held that if the duty paid by the assessee and borne by him and if there is no contest or lis and hence no adversarial assessment ordered. Hence non -filing of appeal against assessment of bill of entry, when there is no lis between importer and the Revenue at the time of payment of duty, will not deprive the importer of his right to file refund claim. He further submits that right from filing the refund application and subsequently from time to time the appellant has submitted all the documents relevant to the refund claim; therefore, the Commissioner (Appeals) ought not to have remanded the case to the lower authority, he should have allowed the appeal.

On the other hand, Shri A.K. Singh, learned Additional Commissioner (authorised representative) appearing for the Revenue reiterates the findings of the impugned order. He further submits that the appellant is required to challenge the assessment of bill of entry without which they are not entitled for the refund claim. Therefore, the findings of the Commissioner (Appeals) is correct and legal and same may be maintained.

(2.)I have carefully considered the submissions made by both sides.
(3.)FROM the facts of the case it is observed that in various proceedings, in the present case of refund claim, it has been consistently admitted that the customs duty paid by the appellant on the goods was not payable. I have carefully gone through the earlier orders and found that the sanctioning authority has clearly recorded the findings as under :
"It follows from the above and Notification No. 64/1997 -Customs, (N.T.), dated December 1, 1997 that the Customs Act, 1962 and the Customs Tariff Act, 1975 were not extended to the location of the ICG installation of M/s. ONGC Ltd. at the time of import of the subject goods on which customs duty of Rs. 34,44,691 were paid vide cash No. 1668, dated December 18, 1989 against bill of entry No. 2824/1, dated November 10, 1989. Evidently, in the absence of applicability of the Customs Act, 1962 and the Customs Tariff Act, 1975, the customs duty paid on the subject goods was not leviable and the same has applied for refund by the applicant."

From the above findings it is clear that the Revenue has categorically admitted that customs duty in this case was not payable. Even in the first round of proceedings, the Commissioner (Appeals) also not raised the issue of challenge of assessment of bill of entry. From this fact, now in the impugned order the Commissioner's direction that the ratio of Flock (India) and Priya Blue Industries Ltd. is maintainable is absolutely wrong. On going through the hon'ble Delhi High Court judgment of Avium Medical Products Ltd. : [2010] 250 ELT 30 (Delhi), I observed that the ratio of the judgment is applicable in the present case, the relevant part of the judgment is reproduced below :

"3. Before we proceed to decide the issue, it would be necessary to reproduce the relevant part of the relevant provision, namely, section 27 of the Customs Act, 1962 which is as under :

'27. Claim for refund of duty. - -(1) Any person claiming refund of any duty -

(i) paid by him in pursuance of an order of assessment; of

(ii) borne by him, may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Customs or Deputy Commissioner of Customs -

(a) in the case of any import made by any individual for his personal use or by the Government or by any educational, research or charitable institution or hospital, before the expiry of one year;

(b) in any other case, before the expiry of six months,

from the date of payment of duty and interest, if any, paid on such duty, in such form and manner as may be specified in the regulations made in this behalf and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 28C) as the applicant may furnish to establish that the amount of duty and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person :

Provided that where an application for refund has been made before the commencement of the Central Excise and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub -section and the same shall be dealt with in accordance with the provisions of sub -section (2).'"

If, therefore, we refer to language of section 27, it is more than clear that the duty which is paid is not necessarily pursuant to an order of assessment but can also be borne by him. Clauses (i) and (ii) of sub -section (1) of section 27 are clearly in the alternative as the expression 'or' is found in between clauses (i) and (ii). The object of section 27(1)(i), (ii) is to cover those clauses of case where the duty is paid by a person without an order of assessment, i.e., in a case like the present where the assessee pays the duty in ignorance of a notification which allows him payment of concessional rate of duty merely after filing a bill of entry. In fact, such a case is the present case in which there is no assessment order for being challenged in the appeal which is passed under section 27(1)(i) of the Act because there is no contest or lis and hence no adversarial assessment order.

The Tribunal has referred to the cases of CCE v. Flock (India) P. Ltd. : [2000] 120 ELT 285 (SC) and Priya Blue Industries Ltd. v. Commissioner of Customs : [2004] 3 RC 441 : [2004] 172 ELT 145 (SC). In both these cases, referred to by the Tribunal there was an assessment order which was passed and consequently it was held that where an adjudicating authority passed an order which is appealable and the party did not chose to exercise the statutory right of appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that adjudicating authority had committed an error in passing his order. These judgments will, therefore, not apply when there is no assessment order on dispute/contest, like as is in the facts of the present case.

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