Holding

A refund claim under Section 27 is not maintainable unless the assessment order has been reviewed under Section 28 or modified on appeal; the officer considering the refund cannot also review the assessment.

Summary

Priya Blue Industries Ltd imported a ship, paid customs duty under protest and later filed a claim for refund of Rs 79,64,648 under Section 27 of the Customs Act, 1962. The refund claim was rejected, as were subsequent appeals before the Customs, Excise and Gold (Control) Appellate Tribunal and the Supreme Court. The company filed a review petition arguing that a refund claim could be made without first appealing the assessment order, relying on the wording “in pursuance of an Order of Assessment” and the statutory limitation period. The Court held that an assessment order remains operative until it is reviewed under Section 28 or modified on appeal, and that a refund claim is not an appeal; therefore the officer cannot review the assessment while considering the refund. The phrase “in pursuance of an Order of Assessment” merely identifies who may claim a refund, not that the claim can be made without challenging the assessment. The limitation period does not alter this requirement. Consequently, the review petition was dismissed.

Issues considered

Is a claim for refund under Section 27 of the Customs Act, 1962 maintainable without first filing an appeal against the assessment order?
The interpretation of the phrase “in pursuance of an Order of Assessment” and whether the statutory limitation period permits a refund claim absent an appeal.

Legislation cited

Customs Act, 1962s. 27, s. 28

Subjects

Customs dutyRefund claimAssessment orderSection 27Section 28AppealLimitation periodReview petitionMaintainability

Judgment

MIS. PRIY A BLUE INDUSTRIES LTD. A
v.
COMMISSIONER OF CUSTOMS (PREVENTIVE)

SEPTEMBER 17, 2004

[S.N. V ARIA VA AND H.K. SEMA, JJ.] B

Customs Act, 1962-Section 27-Duty-Claim for refund-Without
challenging the Assessment order-Maintainability of the claim-Held: Not
maintainable unless the Assessment order is reviewed or modified in
appeal-Officer considering refund claim cannot review an Assessment
Order.
c
Appellant-Company had paid duty on imported ship under protest.
Its claim for refund of the duty was rejected. Its appeal against the
rejection ofrefund was also rejected. Customs, Excise and Gold (Control)
Appellate Tribunal (CEGAT) dismissed the appeal holding that refund D
claim was not maintainable as no appeal was filed against the Assessment
Order. Appeal before this Court was also dismissed. Hence the present
review petition.

Appellant contended that claim for refund was maintainable even
if Assessment was not challenged because correctness of Assessment
E
could be examined whilst considering the claim for refund; that the
words "in pursuance of an Order of Assessment" imply that claim for
refund can be made without challenging the Assessment; and that the
provision providing limitation period of 1 year or 6 months for filing
claim for refund showed that refund could be claimed even without F
challenging the Assessment.

Dismissing the petition, the Court

HELD: 1. Once an Order of Assessment is passed the duty would
be payable as per that order. Unless that order of Assessment has been G
reviewed under Section 28 of Customs Act, 1962 and/or modified in
appeal, that order stands. So long as the order or Assessment stands the
duty would be payable as per that order of Assessment. A refund claim
is not an appeal proceeding. The Officer considering a refund claim
cannot sit in appeal over an Assessment made by a competent Officer. H
501
502 SUPREME COURT REPORTS [2004] SUPP. 4 S.C.R.

A The Officer considering the refund claim cannot also review an
Assessment order. [504-A, BJ

2. The words "in pursuance of an Order of Assessment" only
indicate the party/person who can make a claim for refund. In other
B words, they enable a person who has paid duty in pursuance of an order
of Assessment to claim refund. These words do not lead to the conclusion
that without the order of Assessment having been modified in appeal or
reviewed a claim for refund can be maintained. [504-D, E]

3. The provisions for a period of limitation do not indicate that a
C refund claim could be filed without filing an appeal. [504-C]

Collector of Central Excise v. Flock (India) Pvt. Ltd, (2000) 6 SCC
650, relied on.

CIVIL APPELLATE JURISDICTION : Review Petition (C) Nos. 96 of
D 2004.

IN

Civil Appeal No. 9045 of 2003.
E
From the Judgment and Order dated 28.5.2002 and 27.6.2003 of the
Central Excise, Customs and Gold (Control) Appellate Tribunal, New Delhi
in A. No. C/588/2001-B and C/ROM/222/2002-B and F.O. Nos. 261/2002-
B and Misc. 0. No. 72 of 2003-B.

F Vikram Nankani, Tarun Gulati and S. Hariharan for the Petit"ioner/
Appellant.

Mohan Parasaran, Additional Solicitor General, Rupesh Kumar and ;P.
Panneswaran for the Respondent. · .;

G The Judgment of the Court was delivered by

S.N. VARIAVA, J. : By this Review Petition, an Order dated 14th
November, 2003 is sought to be reviewed.

H The facts necessary for the purposes of this Order are as follows:
PRIYA BLUE INDUSTRIES LTD. v. COMMR. OF CUSTOMS [VARIAVA, J.]503

The Petitioners had imported a ship for breaking purposes. They filed A
a Bill of Entry. The amount of duty payable was assessed. The Petitioners
paid the duty under protest. They then filed a Claim for refund of Rs.
79,64,648 on the ground that duty had been wrongly levied. Their refund was
rejected on 30th August, 2000. The Appeal filed by them was rejected on
31st October, 200 I. The further Appeal filed before t'~e Cestoms, Excise and · B
Gold (Control) Appellate Tribunal (CEGA T) was dismissed by the Tribunal
on 28th May, 2002. The Tribunal followed the Judgment of this Court in the

- case of Collector of Central Excise v. Flock (India) Pvt. Ltd reported in
[2000] 6 SCC 650. The Tribunal held that as no Appeal had been filed against
the Assessment Order the refund claim was not maintainable. The Civil
Appeal filed before this Court was dismissed by our Order dated 14th c
November, 2003 .

.As it has been contended that the provisions of the Customs Act, 1962
are not in para-materia with the provisions of the Excise Act and that the
Judgment of this Court in Flock (India) 's case (supra) would not be D .
applicable, notice was issued.

We have heard parties at great length.

.. Under Section 27 of the Customs Act, 1962 a claim for refund can be
made by any person who had (a) paid duty in pursuance of an Order of E
Assessment or (b) a person who had borne the duty. It has been strenuously
submitted that the words" in pursuance of an Order of Assessment" necessarily
imply that a claim for refund can be made without challenging the Assessment
in an Appeal. It is submitted that ifthe assessment is not correct, a party could
file a claim for refund and the correctness of the Assessment Order can be
F
examined whilst considering the claim for refund. It was submitted that the
wording of Section 27, particularly, the provisions regarding filing ofa claim
for refund within the period of I year or 6 months also showed that a claim
for refund could be made even though no Appeal had been filed against the
Assessment Order. It was submitted that if a claim for refund could only be
made after an Appeal was filed by the party, then the provisions regarding G
filing of a claim within I year or 6 months would become redundant as the
Appeal proceedings would never be over within that period. It was submitted
that in the claim for refund the party could take up the contention that the
Order of Assessment was not correct and could claim refund on that basis
even without filing an Appeal. H
504 SUPREME COURT REPORTS [2004] SUPP. 4 S.C.R.

A We are unable to accept this submission. Just such a contention has
been negatived by this Court in Flock (India) 's case (supra). Once an Order
of Assessment is passed the duty would be payable as per that order. Unless
that order of assessment has been reviewed under Section 28 and/or modified
in an Appeal that Order stands. So long as the Order of Assessment stands
B the duty would be payable as per that Order of Assessment. A refund claim
is ilot an Appeal proceeding. The Officer considering a refund claim cannot
sit in Appeal over an assessment made by a competent Officer. The Officer
considering the refund claim cannot also review an assessment order.

We also see no substance in the contention that provisions for a period
..
C 'of limitation indicates that a refund claim could be filed without filing an
Appeal. Even under Rule 11 under the Excise Act the claim for refund had
to be filed within a period of six months. It was still held, in Flock (India) 's
case (supra), that in the absence of an Appeal having been filed no refund
claim could be made.
D The words "in pursuance of an Order of assessment" only indicate the
party/person who can make a claim for refund. In other words, they enable
a person who has paid duty in pursuance of an Order of assessment to claim
refund. These words do not lead to the conclusion that without the Order of
assessment having been modified in Appeal or reviewed a claim for refund
E can be maintained.

In our view, the ratio in Flock (India) 's case (supra) fully applies. We,
therefore, see no substance in the Review Petition. Accordingly, the Review
Petition stands dismissed with no order as to costs.

F K.K.T. Petition dismissed.