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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 293­294 OF 2009

ITC LIMITED … APPELLANT(S)

VERSUS

COMMISSIONER OF CENTRAL EXCISE, KOLKATA IV … RESPONDENT(S)  

WITH

CIVIL APPEAL NO.2960 OF 2010

CIVIL APPEAL NO.5878 OF 2011

CIVIL APPEAL NO.310 OF 2011

CIVIL APPEAL NOS.4432­4434 OF 2011

CIVIL APPEAL NO.6407 OF 2011

CIVIL APPEAL NOS.1575­1582 OF 2012

CIVIL APPEAL NO.1585 OF 2012

CIVIL APPEAL NO.1571 OF 2012

CIVIL APPEAL NO.5490 OF 2011

CIVIL APPEAL NO.5491 OF 2011

CIVIL APPEAL NO.5489 OF 2011

CIVIL APPEAL NO.6054 OF 2011

CIVIL APPEAL NO.7710 OF 2014

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CIVIL APPEAL NO.59­60 OF 2016

CIVIL APPEAL NO.96 OF 2016

CIVIL APPEAL NOS. 7384­86 OF 2019 (@ SPECIAL LEAVE PETITION (C) NOS.16114­16116 OF 2017)

CIVIL APPEAL NO. 7387 OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.25193 OF 2016)

CIVIL APPEAL NO. 7388  OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.26530 OF 2016)

CIVIL APPEAL NO. 20852 OF 2017

CIVIL APPEAL NO. 7389  OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.4294 OF 2017)

CIVIL APPEAL NO.  7391  OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.6269 OF 2017)

CIVIL APPEAL NO. 7392  OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.15175 OF 2017)

CIVIL APPEAL NO.18765 OF 2017

CIVIL APPEAL NO.  7393 OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.31561 OF 2017)

CIVIL APPEAL NOS. 7394­96 OF 2019 (@ SPECIAL LEAVE PETITION (C) NOS.5040­5042 OF 2018)

CIVIL APPEAL NO.  7397  OF 2019 (@ SPECIAL LEAVE PETITION (C) NO.15363 OF 2018)

CIVIL APPEAL NO.10082 OF 2018

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J U D G M E N T

ARUN MISHRA, J.

1. These appeals have been preferred by the assessees as well as by the

Union of India aggrieved by the judgment and order passed by the High

Courts and Customs, Excise and Service Tax Appellate Tribunal, Kolkata

(for short referred to as “the Tribunal”).  

2. The question involved in these appeals is whether in the absence of

any challenge to the order of assessment in appeal, any refund application

against the assessed duty can be entertained?   

3. The tribunal has in the case of ITC Limited opined that unless the

order of assessment is appealed, no refund application against the assessed

duty can be entertained.  On the other hand, in the cases in which Union of

India or the Department has come up in appeal, the High Court of Delhi

framed question of law as “whether non filing of appeal against the assessed

Bill of Entry in  which there was no  lis  between the importer and the

Revenue at the time of payment of duty will deprive the importer of his right

to file refund claim under Section 27 of the Customs Act, 1962 (for short,

“the 1962 Act”)”?  

4. While interpreting provisions contained in Section 27 of the Act, the

High Court has opined that when there is no assessment order for being

challenged  in  appeal,  which  is  passed under  Section 27(1)(i)  of the Act,

because there  is  no contest  or  lis  and hence no adversarial  assessment

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order, the cases would be covered by the provision of Section 27(i) (ii) and

refund applications can be maintained by the assessee even in the absence

of filing appeals against the assessed bill of entry. The High Court of Madras

has opined similarly.  

5. In the case of  Union of India  & Ors.  vs.  Micromax  Informatics  Ltd.,

reported in (2016) 335 ELT 446 (Del) the High Court of Delhi has opined

that an important change has been made in Section 27 of the Customs Act

in that a person can now claim refund of any duty or interest as long as

such duty or interest was paid or borne by such person. The conditionality

of such payment having been made pursuant to an order of assessment

does not exist. It has also been observed that once an application is made

under Section 27(1) of the Act, it is incumbent on the authority concerned

to make an order under Section 27(2) determining if any duty or interest as

claimed is refundable to the applicant. It has been opined that under

Section 27 of the Act as amended, it is not open to an authority to refuse to

consider the application for refund only because no appeal has been filed

against the assessment order, if there is one.

6. The High court has further opined that although under Section 27(2)

of the Act, the word ‘assessment’ includes a self­assessment, the clearance

of the goods upon filing of the bills of entry and payment of duty is not per

se an assessment order in the context of Section 27(1) (i) as it stood prior to

8.4.2011, particularly, if such duty has not been paid under protest.  In any

event, after 8.4.2011, as long as customs duty or interest has been borne by

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a person, a claim for refund made by such person under Section 27(1) of

the Act will  have to be entertained and an order passed thereon by the

authority concerned, even where an order of assessment may not have been

reviewed or modified in appeal.   Reliance has been placed on the case of

Aman Medical  Products  Limited v.  Commissioner  of  Customs,  Delhi,  2010

(250) ELT 30 (Del).

7. The facts of the case of ITC Limited are that the appellants

manufacture paper from both conventional and unconventional raw

materials.  In the course of the manufacturing activity, waste paper/ broke

arises which are recycled in the manufacturing process by making pulp.

Sometimes, after entry in the  RG  1 register, the paper is found to be

defective and incapable of being sold and as such is required to be

reprocessed and if that is not possible, then it is rejected and has to be re­

pulped and recycled.   

8. The appellant had been paying duty on paper cleared from its factory.

The rate of duty of paper manufactured from conventional and

unconventional raw material differed. The appellants availed exemption

under Notification No.67/95­CE dated March 16, 1995 as to the duty in

respect of waste paper/ fresh broke.   By Notification No.6/2000­CE dated

March 1, 2000 complete exemption was granted in respect of paper up to

the specified quantitative limit manufactured from unconventional raw

materials. Upon receipt of a letter dated March 30, 2001 from the

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Superintendent of Central Excise, the Appellant examined the matter and

realized the mistake committed by it in availing the exemption under

Notification No.67.95­CE in respect of waste paper/ broke utilized in the

manufacture of paper cleared at ‘nil' rate of duty under Notification

No.6/2000­CE.   From May 2001 onwards, the appellant stopped availing

the exemption and started payment of duty on waste paper/broke.

9. The relevant period  involved in the appeal  i.e.  July 2001 to March

2002.   The Appellant's  assessments  for this period were provisional  and

these entries  were finalized on 30.01.2003.  The provisional  assessment

order was passed on 1.3.2002.  The appellant has claimed that at the time

of the said final assessment order dated 30.01.2003, it was not aware of the

notification No.10/96­CE or the said circular dated 1.3.2001 and as such,

no claim thereunder was made by it till that time nor was any such claim so

considered or decided in the said final assessment order.

10. On July 18, 2003, the appellant filed a refund claim for an amount of

Rs.28,73,120/­ in respect of the duty paid on the said waste paper/ broke

during the period from July 2001 to March 2002.   The said refund claim

was filed under section 11(b) of the Central  Excise Act,  1944 (for short,

referred to as “the 1944 Act”) and within the statutory period of limitation.  

11. A  show cause  notice  was issued as to  why the  said  claim be  not

rejected to which a reply was filed.  The assessment committee rejected the

said claim.  The Commissioner of Appeals dismissed the appeal. Thereafter,

successive  appeal  was  preferred  before the  Tribunal.  The  Tribunal  has

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rejected the refund  claim of the  appellant.  Hence, the  appeal  has  been

preferred under section 35(b) of the 1944 Act.

12. In the case of  Union of India & Ors. v. Micromax Informatics Ltd., the

respondents (i.e. Micromax Informatics Ltd.) had imported mobile handsets

including cellular phones during the period 30.07.2014 to 29.8.2014.   At

the time of customs clearance, they paid Additional Customs Duty (CVD)

under Section 3(1) of the Customs Tariff Act, 1975 at the rate of 6 %.  In all,

the imports bills of entry were self­assessed by the respondents in terms of

the Self­Assessment Scheme under section 17 of the Act and were thus

finally assessed. This Court in  M/s. SRF v. Commissioner of Customs,

Chennai 2015 [318] ELT 607 (SC) held that for quantification of CVD in case

of an article that has been imported, it has to be presumed that the said

imported article has been manufactured in India and then the amount of

excise duty leviable thereon has to be ascertained for determining the extent

of exemption from payment of CVD to which the importer would be entitled.

The respondent had filed the refund claim of Rs.35.89 crores for duty totally

paid under the self­assessed bills of entry, under section 27 of the 1962 Act

in the Air Cargo Export Commissionerate, claiming a refund of the

Additional Customs Duty (CVD) in view of Serial Number 263 A and

Condition No.16 of notification No.12/2002­Ex. Dated 17.03.2012 and for

the said Condition No.16, mobile handsets were chargeable to a duty of 1%

if  no  CENVAT credit  had been availed  by the importer.  The  Micromax

claimed that they  had  made excess payment  while complying  with the

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condition No.16 of the aforesaid notification.   They claimed the refund of

deferential duty of 5%.   The Assistant Commissioner (Refunds) rejected all

the claims as not maintainable in the absence of evidence of excess

payment of duty.  He further held that the Bills of Entry had already been

assessed and there were assessment orders which could only be reviewed or

modified in appeal. It was also observed that the respondent failed to

submit any reassessment order or speaking order under section 17(5) of the

1962 Act and that it was beyond the jurisdiction of the Refund Branch to

decide the issue on merits.   The officer considering a refund claim cannot

sit in appeal over an assessment made by a competent officer.   The High

Court  held that  self­assessment is  not  an assessment  order  per  se  and

allowed the writ petition. Hence the appeal by the Union of India.

13. In Commissioner of Customs, New Delhi v. Aman Medical Products Ltd.,

the respondents had imported cannula for the purpose of manufacture of

injection needles. At the time of filing of bills of entry, the respondent could

not indicate the benefits available under notification No.6/2002 Cus, dated

1.3.2002 which provided a concessional rate of duty on the imported goods.

The bills of entry were assessed finally. Subsequently, the respondent filed

an application for refund.   The refund claim was rejected by the Deputy

Commissioner.   The respondent preferred an appeal before the

Commissioner (Appeals) for grant of refund of excess duty paid by them.

The appeal was allowed by the Commissioner of Appeals.  The Department

filed an appeal  before the Tribunal.  The Tribunal  observed  that  refund

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claim cannot be adjudicated on merits.   The respondent – Aman Medical

Products Ltd filed a writ petition before the High Court.   The writ petition

has been allowed.  

14. Shri P. Chidambaram, learned senior counsel has taken us through

the definition of the ‘assessment’ as prevailed under the 1962 Act and the

amended definition under the Act, assessment w.e.f. 8.4.2011, Finance Act,

2011, Section 17 and Section 27 as amended by the Finance Act, 2011.  It

was urged by learned senior counsel that prior to the amendment by the

Finance  Act, 2011, the scheme of assessment  under section  17 of the

Customs Act was such that once a bill of entry was filed, examination and

testing of the imported goods were done by the proper officer.   Thereafter,

an order of assessment was passed after the physical examination.

Accordingly, section 27 of the Customs Act provided that claim for refund to

be made by any person who had (a) paid duty in pursuance of an order of

assessment or (b) a person who had borne the duty.   Earlier, there was a

necessity for an order of assessment by a proper officer under section 17 of

the Customs Act.  After the amendment to the Act in 2011, there is no need

to  get the assessment of  bill  of  exchange done  for  claiming a refund of

excess duty paid under Section 27 of the Act, as now the bill of entry is to

be self­assessed by the importer or exporter and will be subject to

verification.  Further, under section 17(4) of the Customs Act if it is found

that self­assessment of duty has not been done correctly by an importer or

exporter the proper officer, may re­assess the duty. In case of re­assessment

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within fifteen days from the date of re­assessment under section 17(5), a

speaking order has to be passed by the proper officer. In the case of re­

assessment done under section 17(4), it is only in these circumstances an

order is passed.   If no order of assessment is passed in the case of self­

assessment, the refund application can lie.   It was urged that section 27

has also been amended by way of amendment by the Finance Act, 2011. An

application for refund of duty and the requirement of order of assessment

that was requisite before the amendment has now been expressly removed.

It would be a retrograde step to interpret the amended provision otherwise

and to deny the refund claim which is not adjudicatory when the bill  of

entry has been passed.  In the case of self­assessment, the duty paid under

a mistake can always be claimed without filing an appeal and in that event

concerned officer has to look into the matter whether the claim for refund

was justified.

15. Reliance has been placed on behalf of the assessee on SRF Limited vs.

Commissioner of Customs  (supra).   It is not necessary to pass an order of

reassessment or speaking order under the amended provisions of section

17.  The decision in Priya Blue Industries v. Commissioner of Customs 2004

(172) E.L.T. 145 (SC) is based upon the unamended provisions, thus,

cannot hold the field and is inapplicable in view of the amendment made in

the provisions.  Under section 17(1) of the amended provisions, bills of entry

have to be self­assessed by importer or exporter.  The verification of the self­

assessment has now been made optional.  The self­assessment is not to be

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disturbed unless there is a verification required by the proper officer and for

this purpose, he may examine or test goods or part thereof.  

16. It was further urged on behalf of the assessee that amended section

17 and section 27 are to be read together.  By amended section 27 it is now

provided that an application for refund of duty will be made by any person

who has paid the duty or by any person who has borne the duty.   Earlier

refund could be claimed by the person who has paid the duty.   Under the

post amendment provision the words “in pursuance to the order of

assessment” have been deleted and a refund claim is maintainable by the

assessee in case duty has been “paid by him”.  The legislative intent is clear.

Now the order of assessment has been made irrelevant and a re­assessment

to an order is no longer a pre­requisite for maintaining a refund claim. Now

under the scheme of self­assessment, there would be no order of

assessment by the proper officer.   

17. It was further urged on behalf of the assessee that section 27 cannot

be rendered otiose or redundant.   Section 27 does not contain any

stipulation which may suggest that refunds can be filed only after the Bill of

Entry has been appealed against. In the absence of such a statutory

condition, a restriction on refund claim cannot be imported into the statute.

Taxing statute has to be strictly interpreted and there is no room to infer

any intendment thereof as held by this  Court  in Commissioner of Wealth

Tax, Gujarat III Ahmedabad v. Ellis Bridge Gymkhana, (1998) 1 SCC 384.

Reliance has also been placed on the decision of this Court in Maharashtra

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State Financial  Corporation v.  Jaycee Drugs and Pharmaceuticals  (P.)  Ltd.

(1991) 1 SCC 637, O.P. Singla & Anr. v. Union of India & Ors., (1984) 4 SCC

450, and Union of India v. Popular Construction Co., (2001) 8 SCC 470.

18. It was also urged that section 27 is a remedy available to the assessee

for the refund of  duty paid and section 28  is  a remedy available to  the

Department on the recovery of duty not levied and short levied or

erroneously levied. Both the remedies can be availed without filing appeals.

It was further urged that no appeal can be filed under section 128 of the

Customs Act against the bill of entry. As the scheme of assessment under

Section 17 of the Customs Act is that of self­assessment and only when

such a self­assessment is disputed by the proper officer, an order of

assessment is passed then he may appeal to the relevant appellate

authority within 60 days of the communication of the order.  It is only in a

situation where speaking order is passed then the assessee is required to

file an appeal.  Unless a speaking order of assessment is passed, no appeal

can lie and the only option for refund of duty paid is to file a refund claim.

The bill  of entry is  merely  stamped to  allow clearance of the goods.  No

reasons are  provided  in  the bill  of  entry on account of  which  it  can be

regarded as an order which can be subjected to appeal under section 128 of

the Customs Act. The judgment of this Court in Commissioner of Customs v.

Sayed Ali (265) ELT 17 (SC) is not relevant.  The said judgment was passed

in respect of section 28 of the Customs Act.

19. On behalf of the Union of India/Department, it is contended that self­

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assessment  is  an assessment.   It is  not open to  the proper officer after

accepting the self­assessment to entertain a claim for refund in the absence

of the self­assessment being questioned  in the appeal.  The direction to

reassess the bill of entry after the expiry of more than a year cannot be

ordered.  Reliance has been placed on Collector of Central Excise, Kanpur v.

Flock (India) Pvt. Ltd., 2000 (120) ELT 285 (SC).   In the instant case, the

bills of entry were filed and they were self­assessed.   It is an assessment

under the Act and in case benefit of notification has not been claimed, in

the absence of challenge to assessment of bills of entry by way of filing the

appeal, the benefit of  notification cannot be claimed.   An application for

refund is not maintainable in view of the law laid down by this Court in

Flock (India) Pvt. Ltd. (supra) and Priya Blue Industries  (supra).   Once the

self­assessment/assessment attains finality and has not been questioned, it

cannot  be reopened  at  any  point of time.  The refund  claim  is  not  an

appellate 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.  Even

after the amendment is made in 2011, the conditionality of payment having

been made pursuant to an order of assessment continue to exist.   As the

self­assessment of bills of entry is an order of assessment per se, unless the

order of assessment passed under section 2(2) of the Act is appealed before

Commissioner of Appeals for modification no claim for refund can be

entertained.   The provision of section 128 cannot be rendered otiose.   The

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amendment has been made in order to simplify the procedure but the legal

effect of the self­assessment is that of assessment. While processing self­

assessment some exercise has to be done.  Once it is accepted, it becomes

an order of assessment.

20. Right to appeal is available to any person i.e. to the department as

well as to importer/exporter against an order of self­assessment.  Until and

unless assessment order  is  modified and a fresh order of  assessment  is

passed and duty redetermined, the refund cannot be granted by way of

refund application.  The refund authorities  cannot  take over the role  of

Assessing Officer. The officer considering refund claim cannot reassess an

assessment order.   An assessment order has to be questioned within the

stipulated period of limitation.   The refund application cannot be

entertained directly  under  section 27 unless the  order  of  assessment is

appealed against and is modified.  

21. The first question for consideration is whether the assessment

includes self­assessment also. Prior to the amendment by the Finance Act,

2011 the assessment had been defined in Section 2(2) thus:

“2(2) “assessment” includes provisional assessment, reassessment and any order of assessment in which the duty assessed is nil;”

22. After the amendment of Section 2(2) made by the Finance Act, 2011

the definition of ‘assessment’ reads thus:

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 "2(2) "assessment" includes provisional assessment, self­ assessment, reassessment and any assessment in which the duty assessed is nil;"  

23. It is apparent from the amended definition that self­assessment,

provisional assessment, re­assessment and any assessment in which the

duty assessed is nil, is an assessment. Assessment includes self­

assessment, when the provision of self­assessment has been incorporated

in Section 17(1), and corresponding change has been made in the definition

of  assessment  in Section 2(2).  Earlier the word self­assessment was not

included in the definition of assessment.

24. The assessment of duty was provided in section 17 of the unamended

Act prior to 2011. Pre­amended section 17 of the Customs Act is extracted

hereunder:

“17. Assessment of  duty.—(1)   After  an  importer has entered any imported goods under section 46 or an exporter has entered any export goods under section 50 the imported goods or the export goods, as the case may be, or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer.

(2)   After such  examination  and  testing, the  duty, if any, leviable on such goods shall, save as otherwise provided in section 85, be assessed.

(3)  For the purpose of assessing duty under sub­section (2), the proper officer may require the importer, exporter or any other person to produce any contract, broker’s note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required  for  such ascertainment  which  is in his  power to produce or furnish, and thereupon the importer, exporter or

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such other person shall produce such document and furnish such information.

(4)   Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof,  be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under sub­section (3); but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document  or any information so furnished is  not true in respect of any matter relevant to the assessment, the goods may, without prejudice  to any other action which may be taken under this Act, be re­assessed to duty.

(5) Where any assessment done under sub­section (2) is contrary to the claim of the importer or exporter regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any notification therefor under this Act, and in cases other than those where the importer or the exporter, as the case may be, confirms his acceptance of the said assessment in writing, the proper officer shall pass a speaking order within fifteen days from the date of assessment of the bill  of entry or the shipping bill,  as the case may be.”

25. Section 17 as amended by Finance Act, 2011 is extracted hereunder:

“17. Assessment of duty. — (1) An  importer  entering any imported goods under section 46,  or an exporter entering any export goods under section 50, shall  save as otherwise provided in section 85, self­assess the duty, if any, leviable on such goods.

(2) The proper officer may verify the self­assessment of such goods and for  this purpose,  examine or test any  imported goods or export goods  or such part thereof as may be necessary.

[(3) For      verification of self­assessment under sub­section (2), the proper officer  may require the importer, exporter or any other person  to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information.]

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(4) Where it is found on verification, examination or testing of the goods or otherwise that the self­assessment is not done correctly, the proper officer  may, without prejudice  to any other action which may be taken under this Act,  re­assess the duty leviable on such goods.

(5) Where any  re­assessment done under sub­section (4) is contrary to the self­assessment done  by the importer or exporter regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any notification issued therefor under this Act and in cases other than those where the importer or exporter, as the case may be, confirms  his acceptance  of the said  re­assessment in writing, the proper officer shall pass a speaking order on the re­assessment, within fifteen days from the date of re­ assessment of the bill  of entry or the shipping bill,  as the case may be.

(6)  Where re­assessment has not been done or a speaking order has not been passed on re­assessment,  the proper officer may audit the assessment of duty of the imported goods or export goods at his office or at the premises of the importer or exporter, as may be expedient, in such manner as may be prescribed.

Explanation.—For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under section 46 or an exporter has entered any export goods under section 50 before the date on which the Finance Bill, 2011 receives the assent of the President, such imported goods or export goods shall  continue to be governed by the provisions of section 17 as it stood immediately before the date on which such assent is received.]”

(emphasis supplied)     

26. Section 27 deals with a claim for refund of duty. Provision of section 27

which prevailed before amendment by Finance Act, 2011 is extracted

hereunder:

“27. (1) Any person claiming refund of any duty­­­ (i) paid by him in pursuance of an order of assessment; 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

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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 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 Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub­section and  the  same shall  be  dealt  with in  accordance with the provisions of sub­section (2): Provided further that the limitation of one year or six months, as the case may be, shall not apply where any duty and interest, if any, paid on such duty has been paid under protest: Provided also  that in  the case of  goods which are exempt from payment of duty by a special order issued under sub­ section  (2)  of  section 25,  the  limitation of  one year or six months, as  the case may be,  shall  be computed from the date of issue of such order. [Provided also that where the duty becomes refundable as a consequence of  judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year or six months, as the case may be, shall be computed from the date of such judgment, decree, order or direction. Explanation I.­For the purposes of this sub­section, "the date of payment of duty and interest, if any, paid on such duty", in relation  to  a  person,  other than  the importer,  shall  be construed as "the date of purchase of goods" by such person. Explanation II.­Where any duty is paid provisionally under section 18, the limitation of one year or six months, as the case may be, shall be computed from the date of adjustment of duty after the final assessment thereof.

(emphasis supplied)”

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27. The provision of Section 27 of the Customs Act as amended by

Finance Act, 2011 is extracted hereunder:

“27. Claim for refund of duty. ­­  (1) Any person claiming refund of any duty or interest, ­­ (a) paid by him; or (b) borne by him, may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest: Provided that where an application for refund has been made before the date on which the Finance Bill, 2011 receives the assent of the President, such application shall be deemed to have been made under sub­section (1), as it stood before the date on which the Finance Bill, 2011 receives the assent of the President and the same shall be dealt with in accordance with the provisions of sub­section (2): Provided further that the limitation  of one  year shall  not apply where any duty or interest has been paid under protest. Provided also that  where the amount of  refund claimed is less than rupees one hundred, the same shall not be refunded. Explanation. ­­  For the  purposes  of this  sub­section, “the date of payment of duty or interest'' in relation to a person, other than the importer, shall be construed as “the date of purchase of goods” by such person. (1A) The application under sub­section (1) 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 or interest, in relation to which such refund is claimed was collected from, or paid by,  him and  the  incidence of  such duty or interest, has not been passed on by him to any other person. (1B) Save as otherwise provided in this section, the period of limitation  of one year shall be computed in the following manner, namely: ­­ (a) in the case of goods which  are exempt from payment of duty by a special order issued  under sub­section (2) of section 25, the limitation of one year shall be computed from the date of issue of such order; (b) where the duty becomes refundable as a consequence of any  judgment, decree, order or direction of the appellate

20

authority, Appellate Tribunal or any court, the limitation of one year shall be computed from the date of such judgment, decree, order or direction; (c) where any duty is paid provisionally under section 18, the limitation of  one year shall  be computed from the date of adjustment of duty after the final assessment thereof or in case of re­assessment, from the date of such re­assessment.]

(2) If, on receipt of any such application, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied that the whole or any part of the duty and interest, if any, paid on such duty paid by the applicant is refundable,  he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of duty and interest, if any, paid on such duty as determined by the Assistant Commissioner of Customs or Deputy Commissioner of Customs under the foregoing provisions of this sub­section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to­ (a) the duty and interest, if any, paid on such duty paid by the importer [or the exporter, as the case may be], if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (b) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use ; (c) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (d) the export duty as specified in section 26; (e) drawback of duty payable under sections 74 and 75; (f) the duty and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify: (g) the duty paid in excess by the importer before an order permitting clearance of goods for home consumption is made where­­ (i)  such excess payment of duty is evident from the bill  of entry in the case of self­assessed bill of entry; or (ii)  the duty actually payable is reflected in the reassessed bill of entry in the case of reassessment. Provided further that no notification under clause (f) of the first  proviso shall be issued  unless in the  opinion  of the Central  Government the incidence  of  duty  and  interest, if any, paid on such  duty  has not been passed on by the persons concerned to any other person.

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(3)  Notwithstanding anything to the  contrary  contained  in any judgment, decree, order or direction of the  Appellate Tribunal,      the National Tax Tribunal or any Court or in any other provision of this Act or the regulations made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub­section (2).

(4) Every notification under clause (f) of the first proviso to sub­section (2) shall be laid before each House of Parliament, if it is sitting, as soon  as  may  be  after the issue of the notification, and, if it is not sitting, within seven days of its re­assembly, and the  Central  Government shall, seek the approval of  Parliament to the  notification  by  a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder.

(5) For the removal of doubts, it is hereby declared that any notification issued under clause (f) of the first proviso to sub­ section (2), including any such notification approved or modified  under sub­section (4),  may  be rescinded  by the Central Government at any time by notification in the Official Gazette."

(emphasis supplied)

28. Section 28 deals with the recovery of duties not levied or not paid or

short levied or short paid or erroneously refunded. Section 28(1) is extracted

hereunder:  

“28. Recovery of duties not levied or not paid or short­ levied or short­paid or erroneously refunded.­­ (1) Where any duty has not been levied or not paid or has been short­levied or short­paid or erroneously refunded, or any interest payable has not been paid, part­paid or erroneously refunded, for any reason other than the reasons of collusion or any wilful mis­statement or suppression of facts,­­

(a) the proper officer shall, within two years from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied or paid or which has been short­levied or short­paid or to whom the refund has

22

erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; Provided that before issuing notice, the proper officer shall hold pre­notice consultation with the person chargeable with duty or interest in such manner as may be prescribed; (b) the person chargeable with the duty or interest, may pay before service of notice under clause (a) on the basis of,­­ (i) his own ascertainment of such duty; or (ii) the duty ascertained by the proper officer, the amount of duty along with the interest payable thereon under section 28AA or the amount of interest which has not been so paid or part­paid: Provided that the proper officer shall  not serve such show cause notice, where the amount involved is less than rupees one hundred.”                                          

  (emphasis supplied)

29. The  first  question  for  consideration  is  whether  in the case of  self­

assessment without passing a speaking order, it can be termed to be an

order of self­assessment. It was urged on behalf of the assesses that there is

no application of mind and merely an endorsement is made by the

authorities concerned on the bill of entry which cannot be said to be an

order much less a speaking order.

30. In  Escorts Ltd. v. Union of India & Ors.  (1994) Supp. 3 SCC 86 the

question arose for consideration as to the Bill of Entry classifying the

imported goods under a certain tariff item and paying the duty thereon.

This Court held that in such a case signing of the bill of entry itself

amounted to passing an order of assessment. Hence, the application

seeking a refund on the ground that imported goods fell under a different

item attracting a far lower rate of  duty, having been filed more than six

months after the payment of duty, was rightly rejected as time­barred. What

is of significance is that an entry made in the bill of entry has been held to

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be an order  of  assessment  passed by the  Assessing Officer.  This  Court

considered the provisions of sections 47 and 17 of the Customs Act and has

observed:

“9.  Reading Sections 47 and 17  together, it is  clear beyond any doubt,  that as soon as the bill of entry is filed, the proper officer examines the goods, tests them, assesses the proper duty and permits clearance of goods only after the duty and other charges, if any, are paid. In the scheme of the Act, there is no room for contending that any goods will be allowed to be cleared without assessment of the duty, whether provisional or final, as the case may be.

10.   Now it may be noticed that the  Act does not prescribe any particular form in which the order of assessment is to be made. In the very nature of things, no formal order of assessment can be expected when there is no dispute as to the classification or the rate of duty. No formal order can be expected in such a case, it is more like ‘across­the­counter' affair. In the  present case, it  may  be reiterated that the appellant himself classified the goods under tariff  item No. 73.33/40 and paid the duty at the rate applicable thereunder. At that stage, he did not raise any dispute either as to classification or as to the right of duty applicable. Hence, there  was  no  occasion for  passing  a formal order since there was no lis at that stage. The bill of entry presented by the appellant was signed, signifying approval by the assessing officer. That itself is an order of assessment in such a situation. We are, therefore,  not prepared to agree that there is no order of assessment in this case, and therefore, the limitation prescribed in  Section  27  did not begin to run. Section 27 is emphatic in language. It says that an application for refund of duty shall be made before the expiry of six months from the date on which the duty was paid. In the face of this provision, the authorities under the Act, including the Government of India, had no option but to dismiss the appellant’s application.  This is also the view taken by this Court in Madras Rubber Factory Ltd. v. Union of India (1976) 2 SCC 255.”

(emphasis supplied)

31. It is apparent from the aforesaid discussion that the endorsement made

on the bill of entry is an order of assessment. It cannot be said that there is

24

no order of assessment passed in such a case. When there is no  lis,

speaking order is not required to be passed in “across the counter affair”.

32. Coming to the procedure of assessment of duty as prevailed before the

amendment of the Act prior to the amendment made in section 17(1) by the

Finance Act of 2011, the imported goods or exported goods were required to

be examined and tested by the proper officer. After such examination, he

had to make an assessment of the duty,  if  any,  leviable on these goods.

Under sub­section (3) of section 17, the proper officer was authorized to

require the importer, exporter or any other person to produce any contract,

broker's  note  or  any other  document  as  specified in the  proviso and  to

furnish any required information. Notwithstanding that the statements

made in the bill of entry relating thereto and the documents produced and

the information furnished under sub­section (3); but if it was found

subsequently on examination or testing of the goods or otherwise that any

statement in such bill of entry or document or any information so furnished

was not true,  he could have proceeded to reassess the duty.  Where the

assessment done  under sub­section (2) is contrary to the claim  of the

importer or exporter regarding valuation of the goods, classification,

exemption or concession, speaking order shall  be passed within 15 days

from the date of assessment of the bill of entry or the shipping bill as the

case may be as provided in section 17(5).

33. Under the  provisions  of section 17 as  amended by Finance  Act  of

2011, section 17(1) has provided to self­assess the duty if any leviable on

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such goods by importer or exporter as the case may be. Self­assessment is

an assessment as per the amended definition of section 2(2). It is further

provided that proper officer may verify the self­assessment of such goods,

and for this purpose, examine or test any imported goods or exported goods

or such part thereof as may be necessary. The power to verify self­

assessment lies with the proper officer and for that purpose under section

17(3), he may require the importer, exporter or any other person to produce

such document and furnish such information, etc. If the proper officer on

verification has found on examination or testing of  the goods or as part

thereof  or otherwise that  the self­assessment  is  not done correctly,   the

proper officer  may,  without prejudice  to any other action which may be

taken under the Act, may proceed to re­assess the duty leviable on such

goods. Section 17(5) of the Act as amended provides that where re­

assessment  done  under  sub­section 17(4) is  contrary to the  assessment

done by the importer or exporter regarding the matters specified therein, the

proper officer has to pass a speaking order on the re­assessment, within 15

days from the date of reassessment of the bill of entry or the shipping bill,

as the case may be. The explanation to amended section 17 has clarified

that import or export before the amendment by Finance Act, 2011 shall be

governed by unamended provisions of section 17.  

34. Section 18 deals with the provisional assessment of duty where the

importer or exporter is unable to make self­assessment or the proper officer

deem it necessary to subject any imported or export goods to any chemical

26

or other tests; or where further inquiry is deemed necessary by the proper

officer.  

35. Section 27 of the Act prior to amendment by Finance Act, 2011

provided for refund procedure. Any person could claim a refund of duty and

interest if any paid on such duty. Refund of duty and interest if any paid

pursuant to the order of assessment or borne by him, may make an

application for refund of such duty to the Assistant Commissioner of

Customs or Deputy Commissioner of Customs within one year in the case of

any import made by any individual for his personal use or by Government

or by any educational, research or charitable institution or hospital. In any

other case before the expiry of six months from the date of payment of duty

and  interest.  He has  to further  satisfy that  he has not  passed on such

liability to any other person. The limitation of one year or six months shall

not apply where any duty and interest has been paid under protest. It is

made  clear  by the  second  proviso to section  27 that in case  of refund

becomes necessary as a consequence of judgment, decree, order or direction

of the appellate authority, Appellate Tribunal or any court, the limitation of

one year or six months shall commence from the date of such judgment,

decree, order or direction.  

36. Section 27 of the  Customs Act  as  amended by  Finance  Act,  2011

provides that any person claiming refund of any duty or interest paid or

borne by him, may make an application in such form and manner as may

be prescribed for such refund to the Assistant or Deputy Commissioner of

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Customs before the expiry of one year from the date of payment of such

duty or interest. If an application for refund has been made before Finance

Bill received the assent of the President, it is deemed to be filed under the

provision of section 27 (1) as existed and to be dealt with under section

27(2).   The period of limitation of one year provided by the provisions of

section 27 has to be computed in the case of goods which are exempt from

payment of duty by a special order issued under section 25(2) from the date

of issue of such an order as provided in section 27(1B)(a). Where the duty

becomes refundable as a consequence of  any judgment, decree, order or

direction of the appellate authority, Appellate Tribunal or any Court, the

limitation of one year shall be computed from the date of such judgment,

decree, order or direction. It is provided in Section 27(1B)(c) that where any

duty is paid provisionally under Section 18, the limitation of one year shall

be computed from the date of adjustment of duty after the final assessment

thereof or in the case of re­assessment, from the date of such re­

assessment. The second proviso to section 27 makes it clear that limitation

of 1 year shall not apply where any duty or interest has been paid under

protest.   

37. Under Section 27(2)(a) it is incumbent upon the applicant to satisfy

that the amount of duty or interest of which refund has been claimed, had

not been passed by him to any other person, the provision aims at

preventing unjust enrichment.

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38. No doubt about it that the expression which was earlier used in

Section 27(1)(i) that “in pursuance of  an order of  assessment” has been

deleted from the amended provision of Section 27 due to introduction of

provision as to self­assessment. However, as self­assessment is nonetheless

an  order of assessment, no  difference is  made  by  deletion of aforesaid

expression  as  no  separate reasoned  assessment  order is required to  be

passed in the case of self­assessment as observed by this Court in Escorts

Ltd. v. Union of India & Ors. (supra).  

39. In  Collector of  Central Excise,  Kanpur v. Flock  (India) Pvt.  Ltd.  2000

(120) ELT 285 (SC)= (2000) 6 SCC 650, the question which came up for

consideration before this Court was non­challenge of an appealable order

where the adjudicating authority had passed an order which is appealable

under the statute, and the party aggrieved did not choose to file an appeal.

This Court held that 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 the adjudicating authority had committed an

error in passing the order. The provisions of the Central Excise Act, 1944

came up for consideration. The Court has observed:

“10.  Coming  to the  question  that is raised, there is little scope for doubt that in a case  where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an 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 the adjudicating authority  had committed an error in passing its order.  If this position is

29

accepted then the provisions for adjudication in the Act and the Rules, the provision for appeal in the Act and the Rules will lose their relevance and the entire exercise will be rendered redundant.  This position, in our view, will run counter to the scheme of the Act and will introduce an element of uncertainty in the entire process of levy and collection of excise duty.  Such a position cannot be countenanced. The view was taken by us also gains support from the provision in sub­rule (3) of Rule 11 wherein it is laid down that whereas a result of any order passed in appeal or revision under the Act, refund of any duty becomes due to any  person, the  proper  officer  may refund  the  amount to such person without his having to make any claim in that behalf. The provision indicates the importance attached to an order of the appellate or revisional authority under the Act. Therefore, if an order which is appealable under the Act is not challenged then the order is not liable to be questioned and the matter is not to be reopened in a proceeding for the refund which, if we may term it so, is in the nature of execution of a decree/order. In the case  at  hand, it  was specifically mentioned in the order of the Assistant Collector that the assessee may file an appeal against the order before the Collector (Appeals) if so advised."           

(emphasis supplied)

40. In  Priya Blue Industries Ltd. v. Commissioner of Customs  (Preventive)

2004 (172) ELT 145 (SC)= (2005) 10 SCC 433, the Court considered

unamended provision of Section 27 of the Customs Act and a similar

submission was raised which was rejected by this Court observing that so

long as the order of assessment stands, the duty would be payable as per

that order of assessment. This Court has observed thus:

 "6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India) case (2000) 6  SCC 650.  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 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

30

competent officer. The officer  considering the refund claim cannot also review an assessment order.

7. We also see no substance in the contention that provision for a period of limitation indicates that a refund claim could be filed  without filing an  appeal. Even  under  Section 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.

8. 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 the 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."

(emphasis supplied)

41. It is apparent from provisions of refund that it is more or less in the

nature of execution  proceedings. It is not open to the authority  which

processes the refund to make a fresh assessment on merits and to correct

assessment on the basis of mistake or otherwise.

42. It was contended that no appeal lies against the order of self­

assessment.   The provisions of Section 128 deal with appeals to the

Commissioner (Appeals). Any person aggrieved by any decision or order may

appeal to the Commissioner (Appeals) within 60 days. There is a provision

for condonation of delay for another 30 days. The provisions of Section 128

are extracted hereunder:

“128. Appeals to [Commissioner (Appeals)]. ­­ (1) Any person aggrieved by any decision or order passed under this Act by an officer of customs lower in rank than a [Principal Commissioner of Customs or Commissioner of Customs] may appeal to the [Commissioner (Appeals)] [within  sixty  days] from the date of the communication to him of such decision or order:

31

[Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the  appeal  within the  aforesaid  period  of sixty days, allow it to be presented within a further period of thirty days.]  [(1A) The Commissioner (Appeals) may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall  be granted more than three times to a party during hearing of the appeal.]

(2) Every appeal under this section shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf."

43. As the order of self­assessment is nonetheless an assessment order

passed  under the  Act, obviously it  would  be appealable  by  any  person

aggrieved thereby. The expression ‘Any person' is of wider amplitude. The

revenue, as well  as assessee,  can also prefer an appeal  aggrieved by an

order  of  assessment. It is  not  only the  order  of re­assessment  which  is

appealable but the provisions of Section 128 make appealable any decision

or order under the Act including that of self­assessment. The order of self­

assessment  is an order of assessment as per section 2(2),  as such, it is

appealable in case any person is aggrieved by it. There is a specific

provision made  in Section 17  to  pass a reasoned/speaking order  in  the

situation in case on verification, self­assessment is not found to be

satisfactory,  an  order of re­assessment  has to  be  passed  under section

17(4). Section 128 has not provided for an appeal against a speaking order

but against “any order” which is of wide amplitude. The reasoning employed

by the High Court is that since there is no lis, no speaking order is passed,

32

as such an appeal would not lie, is not sustainable in law, is contrary to

what has been held by this Court in Escorts (supra).

44. The provisions under section 27 cannot be invoked in the absence of

amendment or modification having been made in the bill of entry on the

basis of which self­assessment has been made. In other words, the order of

self­assessment is required to be followed unless modified before the claim

for refund is entertained under Section 27. The refund proceedings are in

the nature of execution for refunding amount. It is not assessment or re­

assessment proceedings at all. Apart from that, there are other conditions

which are to be satisfied for claiming exemption, as provided in the

exemption notification. Existence of those exigencies is also to be proved

which cannot be adjudicated within the scope of provisions as to refund.

While processing a refund application, re­assessment is not permitted nor

conditions of  exemption can be adjudicated.  Re­assessment  is  permitted

only under Section 17(3)(4) and (5) of the amended provisions. Similar was

the position prior to the amendment. It will virtually amount to an order of

assessment or re­assessment in case the Assistant Commissioner or Deputy

Commissioner of Customs while dealing with refund application is

permitted to adjudicate upon the entire issue which cannot be done in the

ken of the refund provisions under Section 27. In Hero Cycles Ltd. v. Union

of  India  2009 (240) ELT 490 (Bom.) though the High Court interfered to

direct the entertainment of refund application of the duty paid under the

33

mistake of law. However, it was observed that amendment to the original

order of assessment is necessary as the relief for a refund of claim is not

available as held by this Court in Priya Blue Industries Ltd. (supra).  

45. Reliance was also placed on a decision of Rajasthan High Court with

respect to service tax in Central Office Mewar Palace Org. v. Union of India

2008 (12) STR 545 (Raj.). In view of the aforesaid discussion, we are not

inclined to accept the reasoning adopted by the High Court, that too is also

not under the provisions of the Customs Act.

46. The decision in  Intex Technologies  (India)  Ltd.  v.  Union of  India  has

followed  Micromax  (supra). The reasoning employed by the High Courts of

Delhi and Madras does not appear to be sound. The scope of the provisions

of refund under Section 27 cannot be enlarged. It has to be read with the

provisions of Sections 17, 18, 28 and 128.  

47. When we consider the overall effect of the provisions prior to

amendment and post­amendment under Finance Act, 2011, we are of the

opinion that the claim for refund cannot be entertained unless the order of

assessment or self­assessment is modified in accordance with law by taking

recourse to the appropriate proceedings and it would not be within the ken

of Section 27 to set aside the order of self­assessment and reassess the duty

for making refund; and in case any person is aggrieved by any order which

would include self­assessment,  he  has to get the order  modified  under

Section 128 or under other relevant provisions of the Act.

34

48. Resultantly, we find that the order(s) passed by Customs, Excise, and

Service Tax Appellate Tribunal is to be upheld and that passed by the High

Courts of Delhi and Madras to the contrary, deserves to be and are hereby

set aside. We order accordingly. We hold that the applications for refund

were not maintainable. The appeals are accordingly disposed of. Parties to

bear their own costs as incurred.        

…………………………. J. (Arun Mishra)

…………………………. J. (Navin Sinha)

…………………………. J.         (Indira Banerjee)

New Delhi; September 18, 2019.