C.C.-KANDLA VERSUS GOODEARTH MARITIME LTD

CUSTOMS Appeal No. 10141 of 2021-DB

Stay Application No. :-C/Stay/10083/2021

CROSS Application No.:-C/CROSS/10286/2021

[Arising out of Order-in-Original/Appeal No KDL-CUSTM-000-APP-47-20-21 dated

06.11.2020 passed by Commissioner of CUSTOMS-KANDLA]

 

C.C.-KANDLA

VERSUS

GOODEARTH MARITIME LTD

WITH

CUSTOMS Appeal No. 10139 of 2022-DB

Stay Application No. :-C/Stay/10100/2022

CROSS Application No.:-C/CROSS/10155/2022

[Arising out of Order-in-Original/Appeal No KDL-CUSTM-000-APP-41-21-22 dated 30.11.2021

passed by Commissioner of CUSTOMS-KANDLA]

C.C.-KANDLA

VERSUS

GOODEARTH MARITIME LTD

APPEARANCE:

Shri G. Kirupanandan, Superintendent (AR) for the Appellant

Shri Naresh Satwani, Consultant for the Respondent

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR

HON’BLE MEMBER (TECHNICAL), MR. RAJU

FINAL ORDER NO. A/10260 – 10261 / 2023

DATE OF HEARING:17.01.2023

DATE OF DECISION:06.02.2023

RAMESH NAIR

The issue involved in the present case is that whether the appellant is

eligible for refund of Cost recovery charges paid by them.

The brief facts of the case are that the cost recovery charges was

recovered by the department was ordered to be refunded by the learned

commissioner (Appeals) in pursuance to this Tribunal order No.

A/10788/2020, dated 12.03.20, whereby the demand of cost recovery

charges was set aside and appeal of the Respondent was allowed against the

sanction of refund ordered by the Learned Commissioner (Appeals), the

present appeals are filed by the revenue.

Shri G. Kirupanandan, Learned Superintendent (AR) appearing on behalf

of the Revenue submits that since the Tribunal order on the basis of which the

Learned Commissioner (appeals) has granted the refund has been challenged

by the revenue before the Hon’ble Gujarat High Court, these appeals were

filed by the revenue. He submits that since the demand issue is pending before

the high court, the stay from the order of the commissioner (appeals) be

granted.

Shri Naresh Satwani, Learned Consultant appearing on behalf of the

revenue submits that though the department has challenged the order of this

Tribunal but no stay has been granted by the Hon’ble High Court. Therefore,

the learned Commissioner (appeals) has rightly granted the refund on the

basis of this Tribunal’s order. 

We have carefully considered the submission made by both the sides

and perused the records. We find that the Learned Commissioner (appeals)

has granted the refund in pursuance to this Tribunal’s order No.

A/10788/2020, dated 12.03.20, whereby on merit the demand of cost

recovery charges was set aside. Hence this refund is consequential relief to

the afore said Tribunal’s order. Though the revenue has challenged the order

of this tribunal before the High Court but, since there is no stay, the order of

the Commissioner (Appeals) cannot be disturbed. Therefore, in view of this

Tribunal’s order No. A/10788/2020. Since the demand of cost recovery

charges has been set aside. The appellant was rightly granted the refund by

the learned commissioner (appeals).

The Central Board of Excise and Custom has repeatedly clarified that

when any refund arises out of any order of adjudication/Commissioner

(Appeals)/ CESTAT. unless a stay order is obtained refund must be granted

after 3 months from the date of the order. The relevant CBEC Circular No.

572/9/2001-CX., dated 22.02.2001 is reproduced below:

“Refund/Rebate claims — Disposal of claims where application pending at

appellate level

Circular No. 572/9/2001-CX, dated 22-2-2001

  1. No. 201/20/2000-CX.6

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject : Central Excise & Customs — Disposal of refund/rebate claims

where application is pending at appellate level — Instructions – Regarding.

I am directed to state that it has come to notice of the Board that doubts

prevail in the field formations in regard to action to be taken for disposal of

refund/rebate cases where the matter is pending with different appellate

authorities. In this regard, attention is drawn to the CBEC Circular No.

398/31/98-CX., dated 2nd June, 1998 and the CBEC Circular No. 76/95-

Cus., dated 28th June, 1995. After examining the issue in detail and in

suppression of the aforementioned Circulars, the Board has decided to issue

the following guidelines in this regard, which will be applicable to both

Customs and Central Excise matters :-

(1) Cases where it is considered advisable to contest an adverse

High Court’s Judgment, inter alia, involving substantial refund or

release of any seized/confiscated goods by filing Special Leave

Petition (SLP) including Stay Application, in the Hon’ble Supreme

Court.

(a) In such cases most speedy action should be taken by concerned

Commissioner to submit, considered comments, grounds for appeal and all

relevant papers to Board for taking Law Ministry’s advice and if agreed filing

SLP & Stay Petition against the order of the High Court. (Where appropriate

considering the stakes and urgency of the matter conversant officer dealing

with the case be also deputed to help expedite the aforesaid action).

(b) In terms of the present practice in the Supreme Court Registry, the

SLPs/Stay Applications filed in the Supreme Court are listed for hearing in

their own turn according to the dates of their filing. However, in case of

urgency, there is a procedure of mentioning before the bench headed by the

Chief Justice of India for ad interim stay till the stay application is heard and

disposed of by the Supreme Court. For this purpose, the Central Agency

Section is requested to file an application with the Registrar of the Supreme

Court giving reasons justifying out of turn hearing of the stay application. In

case the Registrar is satisfied about the urgency, the application is included

in the “list of cases for urgent mentioning” and it is then possible to mention

the case on the following day before the bench headed by the Chief Justice

of India.

In view of the aforesaid procedure, it may not be possible to move the

Supreme Court for out of turn hearing of stay applications in every case in

a routine way. We will have to justify the urgency and serious implications

if the adverse order is not stayed. It may also not be always possible to get

our applications listed according to our wish. The Commissioners should,

therefore, while ensuring submission of proposals for SLP/Stay on top

priority basis also take steps simultaneously so that non-implementation of

the High Court’s Order without obtaining stay from the Supreme Court does

not create complications. In such cases, therefore the following action is

advised :-

(i) Where a High Court has stipulated any time-limit for implementation of

its order, the Customs House/Central Excise Commissionerate apart from

taking steps for filing SLP/Stay Petition before the deadline, as mentioned

in para (a) above, should simultaneously file an application before the High

Court intimating steps taken for filing SLP/Stay Petition before the Apex

Court, and request be made for extension of time-limit for implementation

of the order till the department’s Stay Application is heard or disposed of by

the Hon’ble Supreme Court. If the High Court rejects the application, a copy

of the application filed and the order of the High Court should be immediately

faxed to the Board, so that even this could be produced to Supreme Court

Registry, while seeking out of turn/urgent hearing for stay.

(ii) Where no time-limit is stipulated by the High Court for implementing its

order, but the petitioner files a contempt petition/notice in the High Court,

the same should be immediately faxed to the Board, for similar action as

mentioned in (i) above for pressing for urgent hearing of our stay.

It would be possible for the Board’s office to file SLP/Stay Petition with

relevant documents showing justification for urgency petition before the

Registrar of the Supreme Court (for inclusion of department’s application for

out of turn hearing in the ‘list of cases for urgent of monitoring’), and to get

interim stay in time, from the Supreme Court when we have a good case,

only if Commissioners and the Legal Cells keep very strict personal watch

for taking time bound & speedy action suggested above.

No unilateral decision should be taken by the Commissioners to release

the goods/order refund in a case where it is decided in consultation with our

Counsels in the field, and Law Ministry, to file SLP/Stay Application before

the Apex Court against the order of the High Court and till this is pending

decision before the Apex Court. The decision in such cases where there is

any urgency & stay of Apex Court is not forthcoming, should be taken only

in consultation with the Board.

(2) Cases where Civil Appeal (CA) is proposed against adverse

decision of the CEGAT involving high refund and or release of

seized/confiscated goods.

The guidelines applicable to SLPs mentioned above should be followed

mutatis mutandis even in such cases involving Civil Appeals/Stay Petitions.

The relevant papers relating to Civil Appeals should be sent latest within 2

weeks of the receipt of CEGAT Order and active liaison should be kept with

the concerned senior officer in the Board and even Central Agency Section

till the Department’s Stay/CA petitions is heard and decision given by the

Apex Court. Where considered advisable, considering the stakes involved

conversant officer to be deputed for briefing the Senior Counsels/Law Officer

who may be moving for stay petition.

(3) The cases where refund arises due to order of Commissioner

(Appeals) or Commissioner of Central Excise/Customs and decision

is taken to contest them before CEGAT.

In such cases appeal/stay application should be filed expeditiously well

before the expiry of stipulated period of three months (and not waiting for

the last date of filing of appeal). However, no refund/rebate claim should be

withheld on the ground that an appeal has been filed against the order giving

the relief, unless stay order has been obtained. It would be the responsibility

of the concerned Commissioner to obtain stay order expeditiously where the

orders passed by Commissioner (Appeals) suffer from serious infirmities and

it involves grant of heavy refunds.

(4) Cases where refund arises due to order of a Central Excise

Officer/Customs Officer subordinate to Commissioner of Central

Excise/Cus-toms and decision is taken to file appeal before

Commissioner (Appeals).

In such cases also, appeal/stay application should be filed expeditiously

within the stipulated period (but without waiting for the last date of filing of

appeal). However, no refund/rebate claim should be withheld on the ground

that an appeal has been filed against the order giving the relief, unless stay

order has been obtained. It would be the responsibility of the concerned

Commissioner to move expeditiously and obtain stay order from

Commissioner (Appeals), especially where the orders passed by such

Central Excise Officer/Customs Officer suffer from serious infirmities and it

involves grant of heavy refunds.

(5) General

In all types of cases mentioned above, processing of refund application

should simultaneously start separately from the point of view of unjust

enrichment provisions and accordingly the assessee/claimant should be

asked to submit the evidence to establish his claim that incidence of duties

whose refund is claimed has been borne by him and that the same has not

been passed on to the buyer(s). Where the claimant is unable to furnish this

evidence or otherwise is not entitled to refund, passing of appropriate orders

on refund requested could be considered by competent authority

irrespective of the outcome of SLP/Civil Appeals/Stay Petitions pending

before Supreme Court or other appeals etc. before lower appellate

authorities.

In all other cases, not involving any dispute, refund applications should be

processed on merits speedily and a decision taken within a period of three

months from the date of application to avoid any interest liability – where

refund is held admissible.”

The relevant amendment to the above circular was made vide following

circular:

“Refund/Rebate claims — Disposal of, during pendency of stay

application before Apex Court — Clarifications

Circular No. 695/11/2003-CX., dated 24-2-2003

  1. No. 268/38/2000-CX.8

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject: Central Excise and Customs – Disposal of refund/rebate

claims where Special Leave Petition/Civil Application along with

stay application is pending at Supreme Court – Regarding.

I am directed to refer to clauses (1) and (2) of Board’s Circular

No. 572/9/2001-CX., dated 22-2-2001 [2001 (129) E.L.T. T7]

which inter alia provides that in cases where the Department has

filed Special Leave Petition/Civil Application along with stay

application against the adverse order of High Court/CEGAT as the

case may be, no unilateral action should be taken by the

Commissioners to release goods/order refund and decision in such

cases where stay order is not forthcoming, should be taken only

in consultation with the Board. In this connection, a number of

references from field formations have been received.

  1. Board has examined the matter. It is observed that the above

guidelines requiring consultation with Board in such cases dilute

the legal position that the order of High Court/Tribunal should be

implemented unless a stay has been obtained from the higher

judicial forum on the implementation of the order. Further,

consultation with Board in such cases may cause into delay in

finalisation of the refund claims. Accordingly, Board has decided

to permit jurisdictional Commissioners to take decision in such

cases on merits at their level to grant refund or release goods

without seeking permission/clearance from the Board. However,

in the matters concerning Supreme Court, the jurisdictional

Commissioners should continue to pursue with the Board for early

disposal of stay application.

  1. Board’s Circular bearing No. 572/9/2001-CX., dated 22-2-

2001 stands modified to the above extent.

  1. Field formations may please be informed suitably.
  2. Receipt of the same may please be acknowledged.
  3. Hindi version will follow.”

In the above circular the board has reiterated its earlier circular No.

572/9/2001-cx dated 22.02.01 which clarified that against the order from

which the refund arises is not stayed by the higher authority within 3 months

the refund must be granted. In the present case the Department has withheld

the refund merely for the reason that this Tribunal’s order dated 12.03.2020,

has been appealed against before the Hon’ble High Court of Gujarat under tax

Appeal No: 299 of 2020. However, even after 2 years of filing tax appeal no

stay could be obtained by the revenue. Therefore, in the light of the above

board Circular which is binding on the departmental officers as per Hon’ble

Larger Bench judgment in the case of Ratan Melting & Wire Industries- 2008

(231) ELT 22 (S.C), which is reproduced below:

“On a reference made by a Bench of three Judges in

Commissioner of Central Excise, Bolpur-V v. Ratan Melting and

Wire Industries, Calcutta [2005 (3) SCC 57], these matters

were placed before this Bench. The reference was necessitated

because of certain observations by a Constitution Bench in

Collector of Central Excise v. Dhiren Chemical Industries [2002

(2) SCC 127]. During the hearing of the appeal before the

three-Judge Bench it was fairly conceded by the parties that

the decision of this Court in Collector of Central Excise, Patna

  1. Usha Martin Industries [1997 (7) SCC 47] on which the

Customs, Excise and Gold (Control) Appellate Tribunal placed

reliance was overruled by the subsequent decision of the

Constitution Bench in Dhiren Chemical’s case (supra). But

learned counsel for the assessee-respondent submitted that

paragraph 11 of Dhiren Chemical’s case (supra) operates in its

favour. It reads as under :

“We need to make it clear that regardless of the

interpretation that we have placed on the said phrase, if

there are circulars which have been issued by the Central

Board of Excise and Customs which place a different

interpretation upon the said phrase, that interpretation

will be binding upon the Revenue.”

  1. It was noted by the three-Judge Bench that the effect of

the aforesaid observations was noted in several decisions. In

Kalyani Packaging Industry v. Union of India and Anr. [2004

(6) SCC 719], it was noted as follows:

“We have noticed that para 9 (para 11 in SCC) of Dhiren

Chemical case [2004 (6) SCC 722] is being

misunderstood. It, therefore, becomes necessary to

clarify para 9 (para 11 in SCC) of Dhiren Chemical case

[2004 (6) SCC 722]. One of us (Variava, J.) was a party

to the judgment of Dhiren Chemical case and knows

what was the intention in incorporating para 9 (para 11

in SCC). It must be remembered that law law laid down

by this Court is law of the land. The law so laid down is

binding on all courts/tribunals and bodies. It is clear that

circulars of the Board cannot prevail over the law laid

down by this Court. However, it was pointed out that

during hearing of Dhiren Chemical case because of the

circulars of the Board in many cases the Department had

granted benefits of exemption notifications. It was

submitted that on the interpretation now given by this

Court in Dhiren Chemical case the Revenue was likely to

reopen cases. Thus para 9 (para 11 in SCC) was

incorporated to ensure that in cases where benefits of

exemption notification had already been granted, the

Revenue would remain bound. The purpose was to see

that such cases were not reopened. However, this did

not mean that even in cases where the

Revenue/Department had already contended that the

benefit of an exemption notification was not available,

and the matter was sub judice before a court or a

tribunal, the court or tribunal would also give effect to

circulars of the Board in preference to a decision of the

Constitution Bench of this Court. Where as a result of

dispute the matter is sub judice, a court/tribunal is, after

Dhiren Chemical case, bound to interpret as set out in

that judgment. To hold otherwise and to interpret in the

manner suggested would mean that courts/tribunals

have to ignore a judgment of this Court and follow

circulars of the Board. That was not what was meant by

para 9 of Dhiren Chemical case.”

  1. The three-Judge Bench agreed with the view expressed in

Kalyani’s case (supra) and observed that the view about

invalidation was sufficient to clarify the observations in

paragraph 11 of Dhiren Chemical’s case (supra). On taking note

of the fact that Dhiren Chemical’s case (supra) was decided by

a bench of five Judges it was felt appropriate that a bench of

similar strength should clarify the position. That is why

reference was made.

  1. Learned counsel for the Union of India submitted that the

law declared by this Court is supreme law of the land under

Article 141 of the Constitution of India, 1950 (in short the

‘Constitution’). The Circulars cannot be given primacy over the

decisions.

  1. Learned counsel for the assessee on the other hand

submitted that once the circular has been issued it is binding

on the revenue authorities and even if it runs counter to the

decision of this Court, the revenue authorities cannot say that

they are not bound by it. The circulars issued by the Board are

not binding on the assessee but are binding on revenue

authorities. It was submitted that once the Board issues a

circular, the revenue authorities cannot take advantage of a

decision of the Supreme Court. The consequences of issuing a

circular are that the authorities cannot act contrary to the

circular. Once the circular is brought to the notice of the Court,

the challenge by the revenue should be turned out and the

revenue cannot lodge an appeal taking the ground which is

contrary to the circular.

  1. Circulars and instructions issued by the Board are no doubt

binding in law on the authorities under the respective statutes,

but when the Supreme Court or the High Court declares the law

on the question arising for consideration, it would not be

appropriate for the Court to direct that the circular should be

given effect to and not the view expressed in a decision of this

Court or the High Court. So far as the clarifications/circulars

issued by the Central Government and of the State Government

are concerned they represent merely their understanding of the

statutory provisions. They are not binding upon the court. It is

for the Court to declare what the particular provision of statute

says and it is not for the Executive. Looked at from another

angle, a circular which is contrary to the statutory provisions

has really no existence in law.

  1. As noted in the order of reference the correct position vis

a-vis the observations in para 11 of Dhiren Chemical’s case

(supra) has been stated in Kalyani’s case (supra). If the

submissions of learned counsel for the assessee are accepted,

it would mean that there is no scope for filing an appeal. In that

case, there is no question of a decision of this Court on the

point being rendered. Obviously, the assessee will not file an

appeal questioning the view expressed vis-a-vis the circular. It

has to be the revenue authority who has to question that. To

lay content with the circular would mean that the valuable right

of challenge would be denied to him and there would be no

scope for adjudication by the High Court or the Supreme Court.

That would be against very concept of majesty of law declared

by this Court and the binding effect in terms of Article 141 of

the Constitution.

  1. The reference is accordingly answered holding that the

correct view has been expressed by Kalyani’s case (supra) as

noted in the reference order.

  1. The appeals filed by the revenue are allowed while those

filed by the assessee stand dismissed.”

Therefore, in view of above legal position, the revenue has no option except

to grant the refund to the respondent. Accordingly, neither the stay application

nor the appeal against the order of the Commissioner (Appeals) granting

refund are not maintainable.

Therefore, we do not find any infirmity in the orders of the Commissioner

(Appeals), hence, the same are upheld Revenue’s appeals are dismissed.

Since the appeals itself are disposed of. The stay applications became

infructuous and dismissed, accordingly, COs also stand disposed of.

(Pronounced in the open Court on 06.02.2023 )

RAMESH NAIR

MEMBER (JUDICIAL)

(RAJU)

MEMBER (TECHNICAL)

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