Supreme Court Bars Customs Refund Without Challenge to Self-Assessment

The Supreme Court of India closed a batch of customs appeals in Commissioner of Customs Vs Standard Consultants Ltd. involving two different issues. One set concerned departmental appeals below the monetary threshold. The other concerned refund claims filed without disputing self-assessment. The bench passed separate directions for the low-value appeals and the refund matters from Hyderabad.

In one group of appeals, the tax effect was less than Rs.25 lakhs. That figure was below the monetary limit fixed in the National Litigation Policy notified by the Ministry of Law and Justice. The learned Additional Solicitor General and senior counsel for the Revenue-appellants said the department did not wish to press those appeals in view of the Policy. The bench dismissed those appeals as not pressed, leaving the underlying disputes in that group undecided on merits.

Tribunal refund orders set aside

Some respondent-assessees had paid duty on self-assessment and later sought refund of customs duty through separate refund applications. Those orders of self-assessment were admittedly not challenged. Only refund applications were filed after the assessments had become final on paper. The Customs, Excise and Service Tax Appellate Tribunal, Regional Bench at Hyderabad had allowed those applications even though the assessments stood without challenge or modification.

The question before the bench was whether such refund claims could survive while the original assessments remained intact. It relied on its earlier decision in ITC Ltd. Vs Commissioner of Central Excise, Kolkata IV. That decision, reported in (2019) 17 SCC 46, holds that a refund claim cannot be maintained without challenging or obtaining modification of the underlying assessment. Applied to these cases, the bench said such claims were not maintainable where the self-assessment had not been challenged.

Civil Appeal Nos. 3344-3345/2017 and 3346-3348/2017 were allowed. By that direction the bench set aside the Tribunal orders dated 22.06.2016 and 15.12.2015. Civil Appeal Nos. 4732/2009 and 18238-18244/2017 were dismissed in the same order. All pending applications shall stand disposed of, the bench directed.

The result is that the assessees who had obtained relief from the Tribunal in the allowed appeals cannot retain those refunds without a successful challenge to the self-assessment. The department's appeals in the low-value group stand closed with no finding on the merits of the duty demands.