Supreme Court Sets Aside Previous Orders Passed By Delhi High Court And Madras High Court In ITC Excise Refund Case

The Supreme Court has upheld the order passed by Customs, Excise, and Service Tax Appellate Tribunal by setting aside orders passed by the Delhi High Court and the Madras High Court in a case pertaining to appeal on excise duty refunds by ITC Limited.

In a judgment passed on September 18, a bench comprising Justice Arun Mishra, Justice Navin Sinha and Justice Indira Banerjee, ruled that applications for refund were not maintainable.

The Supreme Court passed the order after examining the question raised in these appeals whether in the absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty could be entertained.

In the case of ITC Limited, the Customs, Excise, and Service Tax Appellate Tribunal had opined that unless the order of assessment is appealed, no refund application against the assessed duty could be entertained.

As per the Supreme Court judgment, while interpreting provisions contained in Section 27 of the Act, the Delhi High Court had 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 and hence no adversarial assessment 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 Madras High Court too had opined similarly.

“When we consider the overall effect of the provisions prior to amendment and post 'amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-'assessment 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 self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act,” the Supreme Court noted.