GUEST COLUMN

Refunds Claimed in respect of Self Assessed Bills of Entry: Need for Clarification

By Uma Lohray

Associate, Lakshmikumaran & Sridharan Attorneys

We are very often faced with a situation where the benefit of a notification is not availed of by the assesse at the time of filing the bill of entry. In such situations, the following three recourses are available to the assessee:

(a) Filing an amendment to the bill of entry under section 149, Customs Act, 1962;

(b) Filing an appeal against the bill of entry in question;

Amendment to Bill of Entry u/s 149

An amendment may be effected to a bill of entry under section 149, Customs Act, 1962 after goods are cleared for home consumption based on the documentary evidence existing at the time of clearance of the goods. Section 17 provides that a bill of entry may be self-assessed and the proper officer may re-assess or audit the same. There often arises a situation where the assesse has been unable to claim the benefit of a certain exemption notification at the time of filing of the bill of entry, either on account of ignorance or due to a glitch in the EDI system. In this situation since the bill of entry is self-assessed, the Department may raise an objection on the ground that a self-assessed bill of entry cannot be amended. Such a scenario runs contrary to the principle propounded under section 17. Besides, neither section 17, nor section 149 bars amendment when the bill of entry is self-assessed.

Appeal against Bill of Entry

Simultaneously, the assesse would file an appeal against the bill of entry anticipating rejection of the application for amendment under section 149. The assesse would find force in view of the Apex Court’s decision in Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) 2004-VIL-28-SC-CU, which held that an officer considering a refund claim cannot sit in appeal over an assessment made by a competent officer. It is necessary for an appeal to be filed. Thus, a bill of entry was held to be an appealable order. The appellate authority, while considering the assesse’s appeal filed against a self-assessed bill of entry may reject the appeal on the very same grounds stating that the duty was not paid under protest, and the bill of entry against which the appeal is being filed, is a self-assessed one.

Refund Claim u/s 27

The assesse would simultaneously choose to file a refund claim under section 27, Customs Act, 1962 without challenging the bill of entry. Section 27 (post 08.04.2011) of the Customs Act provided that any person claiming refund of any duty- (i) paid by him; or (ii) borne by him, may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant /Deputy Commissioner of Customs. Thus in the light of section 27, as long as the duty is paid/borne by the assesse, refund would be allowable. The Delhi High Court held in Aman Medical Products v. Commissioner of Customs, Delhi 2009-VIL-71-DEL-CU that under section 27, a claim of refund would be maintainable in the absence of an appeal against a bill of entry. One may expect the assesse to squarely fall into this category and be eligible for the refund claim. In this situation, the Department would reject the claim on the ground that the assesse has failed to challenge the bill of entry. This clearly amounts to a vicious cycle which renders the assesse remediless.

Relying upon the findings of the order in Aman Medical Products, the recent decision of the Delhi High Court in M/s Micromax Informatics Ltd. v, Union of India & Ors., 2016-VIL-112-DEL-CU has held that under the provisions of section 27, the condition of payment of duty pursuant to an order of assessment does not exist. Thus, a refund claim will have to be determined even if there is no order of assessment. In other words, an authority cannot refuse to consider an application for refund on the ground that no appeal has been filed against the assessment order.

The Problem

In order to ensure that they are granted relief, it is common practice to initiate the aforementioned three remedies simultaneously as opposed to, in alternative. Such proceedings are initiated in respect of each bill of entry which results in multiplicity of proceedings. In other words, when an assesse fails to claim the benefit of a notification at the stage of clearance of the bill of entry, three parallel proceedings will have to be initiated in respect of each bill of entry. These proceedings are aimed at only one end: to claim refund of the excess paid duty by availing the benefit of the notification in question.

Need of the Hour

There is no elaboration required to describe how multiple proceedings in respect of each bill of entry would adversely affect and overburden our judicial machinery. The exercise seems even more futile due to the fact that unless the matter is listed before the Tribunal, the assesse usually does not get relief.

In the light of these pressing problems, it is imperative that a certain clarifications be made at the earliest. Firstly, either by way of a clarification or an amendment, a self-assessed Bill of Entry should be allowed to be amended. Not allowing the same renders the self-assessment regime redundant.

Secondly, there should be no requirement of filing an appeal against a self-assessed bill of entry. This leads to questions as to disturbing self-assessments.

Alternatively, a direct refund should be allowed to be filed without the requirement of first challenging the bill of entry. This may be done by an amendment to section 27, Customs Act, 1962. At this stage itself, the proper officer should decide the matter on merits and the refund should be sanctioned if the said action succeeds. The process of claiming subsequent benefit of the notification may be restructured by unifying the various streams of actions. This alternative is arguably the most effective remedy as it directly places the matter before the proper officer to decide the matter on merits, look into the issue of amendment and direct the refund claim to be filed. This eliminates intermediate steps and gives faster relief to the aggrieved assesse.

Disclaimer: Views expressed are strictly personal. The content of this document are solely for informational purpose, it doesn’t constitute professional advice or recommendation.