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20 September 2019

Refund claim not maintainable unless self-assessment order is modified though appeal


20th September 2019

3-Judge Bench of the Supreme Court has held that unless the order of assessment or self-assessment is appealed, no refund application against the assessed duty can be entertained.

The Apex Court in this regard observed that endorsement made on the Bill of Entry is an order of assessment, and that speaking order is not required to be passed in ‘across the counter affair’ when there is no lis.

Setting aside the High Court Orders, The Supreme Court in the case ITC Limited v. Commissioner noted that as self-assessment is nonetheless an order of assessment, no difference is made by deletion of the expression “in pursuance of an order of assessment” under Section 27(1)(i) of the Customs Act, 1962 (while introducing provisions of self-assessment) and no separate reasoned assessment order is required to be passed in the case of self-assessment.

It was held that refund proceedings are more or less in the nature of execution proceedings, and 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.

Further, taking note of the fact that provisions of Section 128 make appealable any decision or order under the Customs Act, the Court opined that order of self-assessment is appealable in case any person is aggrieved by it. It observed that Section 128 has not provided for an appeal against a speaking order but against “any order”.

Finally, the Court was of the view that 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.

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