Escort Kubota Limited vs Commissioner of Customs - Chennai II (Import Commissionerate)
- Court
- Customs, Excise and Service Tax Appellate Tribunal
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
CHENNAI
REGIONAL BENCH - COURT No. I
Customs Appeal No. 41713 of 2017
(Arising out of Order in Appeal No. 357 & 358 / 2017, dated 26.04.2017 passed by the
Commissioner of Customs (Appeals II), 60 Rajaji Salai, Custom House, Chennai 600 001)
Escorts Kubota Limited ...Appellant
No.15, Medavakkam Road
Sholinganallur
Chennai 600 119
Versus
Commissioner of Customs ...Respondent
Chennai II Commissionerate
Custom House, No.60, Rajaji Salai,
Chennai 600 001
AND
Customs Appeal No. 41714 of 2017
(Arising out of Order in Appeal No. 357 & 358 / 2017, dated 26.04.2017 passed by the
Commissioner of Customs (Appeals II), 60 Rajaji Salai, Custom House, Chennai 600 001)
Escorts Kubota Limited ...Appellant
No.15, Medavakkam Road
Sholinganallur
Chennai 600 119
Versus
Commissioner of Customs ...Respondent
Chennai II Commissionerate
Custom House, No.60, Rajaji Salai,
Chennai 600 001
APPEARANCE:
For the Appellant :Ms. U. Fasila, Advocate for the Appellant
For the Respondent: Mr. N. Mohan, Authorised Representative
CORAM :
HON’BLE MR. AJAYAN T.V. MEMBER (JUDICIAL)
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FINAL ORDER Nos.41123-41124/2026_
DATE OF HEARING :15.10.2026
DATE OF DECISION:28.10.2026
Per AJAYAN T.V.
M/s. Escorts Kubota Ltd., the appellant herein, assails
the common Order in Appeal C. Cus. II No.357 and 358/2017
dated 26.04.2017 (the impugned order) passed by the
Commissioner of Customs (Appeals II), Chennai, whereby the two
appeals preferred by it against orders confirming recovery of
refund of Special Additional Duty of customs were dismissed,
without the merits being entered upon, for want of the pre deposit
of seven and a half per cent required by Section 129E of the
Customs Act, 1962 (the Act). The appeals were instituted in the
name of M/s. Kubota Agricultural Machinery India Pvt. Ltd., by
which name the appellant figures throughout the proceedings
below. That company having stood amalgamated with M/s. Escorts
Kubota Ltd., an application for change of name was moved and
allowed, and the cause title stands amended accordingly.
2. The appellant manufactures agricultural machinery, engines and
construction equipment. In December 2012, and again between
September and November 2013, it imported a Kubota tractor
B2420, a rotary for KRM 180D, a Kubota rice planter and allied
machinery (the subject goods) under eight Bills of Entry and paid,
besides the other duties of customs, Special Additional Duty levied
under Section 3(5) of the Customs Tariff Act, 1975 (SAD)
aggregating Rs.12,52,720/-. Notification No.102/2007-Cus. dated
14.09.2007 grants exemption from SAD by way of refund where
the importer, on the subsequent sale of the imported goods within
India, pays the appropriate sales tax or value added tax. Board's
Circulars No.6/2008-Cus. dated 28.04.2008 and No.16/2008-Cus.
dated 13.10.2008 lay out instructions on the procedure to be
adopted for such refund. The subject goods stood exempted from
value added tax within the State of Tamil Nadu by G.O. Ms. No.50
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dated 27.03.2012, so that the rate of tax borne on their
subsequent sale was nil.
3. The appellant accordingly applied for refund. The Assistant
Commissioner of Customs (Refunds) adjudicated those
applications and sanctioned the refunds by two orders in original.
By Order in Original No.33770/2015 dated 13.11.2014, which
came to be generated on 06.01.2015, he sanctioned
Rs.2,93,478/- relating to Bill of Entry No.8851563 dated
24.12.2012, and by Order in Original No.34008/2015 dated
24.11.2014 he sanctioned Rs.9,59,242/- relating to the seven Bills
of Entry of September to November 2013.
4. The Commissioner of Customs, Chennai IV, thereafter called for
and examined those orders in exercise of the power of review
conferred by Section 129D of the Act. He took the view that a sale
bearing a nil rate of value added tax is not a sale on which
appropriate value added tax has been paid and that the condition
in paragraph 2(d) of Notification No.102/2007-Cus. therefore
remained unsatisfied. The review led to two consequences. The
first was that the orders sanctioning refund were agitated before
the Commissioner of Customs (Appeals) at the Department's
instance. The second was that, while those appeals were pending,
the officer who had sanctioned the refunds issued two show cause
cum demand notices under Section 28(1) of the Act proposing to
recover the very sums he had himself directed to be paid. Show
Cause cum Demand Notice No.46/2015 dated 17.11.2015 related
to Rs.2,93,478/- and Show Cause cum Demand Notice
No.60/2015 dated 30.11.2015 was with respect to Rs.9,59,242/-,
each notice being based upon the identical ground urged in the
appeals preferred by the Revenue before the appellate authority.
5. The sequence of dates is of consequence. Notice No.46/2015 was
issued on 17.11.2015, whereas the Commissioner (Appeals)
allowed the Department's appeal touching that refund only on
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29.12.2015 by Order in Appeal No.1215 to 1217/2015. Notice
No.60/2015 was issued on 30.11.2015, whereas the
corresponding Order in Appeal No.261/2016 came to be passed on
11.03.2016. On the date of each notice, therefore, the order
sanctioning the refund stood unreversed and held the field, and
the proceeding by which the Department had chosen to have it
displaced was pending before a superior authority at its own
instance.
6. By each of the two Orders in Appeal, the Commissioner (Appeals)
allowed the Department's appeal and directed the lower
adjudicating authority to initiate action to recover the refund with
applicable interest. The appellant preferred appeals against both
orders to this Tribunal. The appeal against Order in Appeal
No.261/2016 was at first dismissed ex parte by Final Order
No.41872/2016 dated 10.10.2016 for want of appearance. That
order was recalled upon an application for rectification, and by
Final Order No.41377 to 41380/2017 dated 28.07.2017 the appeal
was allowed, this Tribunal holding, on the authority of Gazal
Overseas v. Commissioner of Customs, New Delhi, 2016 (332)
E.L.T. 767 (Tri. Del.) that a nil rate of sales tax or value added tax
is itself the appropriate rate and that payment at that rate
answers the condition of the notification. Earlier, by Final Order
No.40889 to 40898/2017 dated 02.06.2017, reported as 2017 (6)
TMI 565 (CESTAT Chennai) , this Tribunal had allowed the
appellant's appeals arising out of Order in Appeal No.1215 to
1217/2015 upon the same reasoning. These Final Orders were not
carried further by the Department and both have attained finality.
7. The proceedings under Section 28 meanwhile ran their own
course, and the outcome thereof is of relevance. By Confirmed
Demand Notice No.30/2016 dated 16.12.2016 the Assistant
Commissioner confirmed recovery of Rs.9,59,242/- under Section
28(8) of the Act with interest under Section 28AA, holding that it
was in view of Final Order No.41872/2016 dated 10.10.2016 that
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the appellant was liable to repay. By Confirmed Demand Notice
No.33/2016 dated 26.12.2016 the Assistant Commissioner
confirmed recovery of Rs.2,93,478/- under Section 28(1) with
interest under Section 28AA, holding in terms that it was in view
of the findings of the Commissioner (Appeals) in Order in Appeal
No.1215 to 1217/2015 that the appellant was liable to repay.
Neither notice rests upon any reasoning independent of those two
orders.
8. Against the two demand notices, the appellant preferred appeals
to the Commissioner of Customs (Appeals). They were presented
on the ninetieth day, that is to say, on the last day of the period of
limitation read with the period which that authority is empowered
to condone, and they were presented through the Sevottam
facilitation counter. The appeals were filed without the pre deposit
having been made. The Commissioner (Appeals) treated them as
incomplete appeals and dismissed both by the impugned order. He
held that the mandatory pre deposit of seven and a half per cent
had not been made. He went on to hold against the appellant that
the appeals had been filed on the ninetieth day, leaving no scope
for any further communication or clarification, and that they had
been routed through Sevottam instead of being lodged directly in
the Appeals Section, which would have afforded an occasion to
point out the deficiency. He recorded that he was constrained to
decide the appeals without extending any opportunity for further
communication or personal hearing, owing to what he described as
the time limit factor envisaged under Section 128 of the Act.
Aggrieved by the impugned order, and having preferred these
appeals, the appellant is now before this Tribunal.
9. On the institution of these appeals, the appellant deposited
Rs.1,25,272/-, being ten per cent of the amounts in dispute. The
appeals were heard on 15.10.2026. At the close of the hearing,
learned counsel for the appellant sought leave to file written
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submissions, which was granted, and those submissions have
since been filed and considered.
10. Ms. U. Fasila, learned Advocate for the appellant, contended that
the question of entitlement to refund arising out of these very
refund applications stands concluded in the appellant's favour by
Final Order No.40889 to 40898/2017 dated 02.06.2017 and Final
Order No.41377 to 41380/2017 dated 28.07.2017, both of which
have attained finality and bind the parties. Once the sanction of
refund has been upheld, she would urge, nothing survives of a
demand founded upon the premise that the refund was erroneous.
She drew the attention of this Tribunal to paragraph 5.3 of
Circular No.6/2008-Cus., which states that the notification carries
no stipulation that the rate of sales tax or value added tax must
equal or exceed the rate of additional duty of customs, and to the
reasoning in Gazal Overseas supra that where the appropriate rate
is nil, the appropriate tax paid is also nil.
11. Ld. Counsel further argued that the notices were void from
inception. An order sanctioning refund under Section 27 of the Act
is an order of adjudication, the only remedies against it are an
appeal under Section 128 or a direction under Section 129D, and
the Refund Authority could not presume his own order to be
erroneous and proceed under Section 28 to undo it. Reliance was
placed upon Eveready Industries India Ltd. v. CESTAT, Chennai,
2016 (337) E.L.T. 189 (Mad.) , S.K. Timber and Co. v.
Commissioner of Customs (Port), Kolkata, 2021 (377) E.L.T. 454
(Tri. Kolkata) , and Shyam Timber Pvt. Ltd. v. Commissioner of
Customs, (2023) 9 Centax 287 (Tri. Ahmd.), affirmed in
Commissioner of Customs v. Shyam Timber Pvt. Ltd., (2025) 28
Centax 137 (Guj.) .
12. As to the pre deposit, she maintained that the requirement of
Section 129E stands satisfied by the deposit of Rs.1,25,272/-
made before this Tribunal, that the objection taken in the
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impugned order is therefore untenable, and that these appeals
ought to be decided finally so that litigation which has already run
for more than a decade is not prolonged by a remand.
13. Shri N. Mohan, learned Authorised Representative for the
respondent, reiterated the findings in the impugned order. He
relied upon Sunil Kumar Patwari v. Additional Commissioner,
Airport and Air Cargo Complex, NSCBI Airport, 2025 (6) TMI 1028
(Calcutta High Court) , to submit that Section 129E erects an
absolute embargo, that the Commissioner (Appeals) is forbidden
to entertain an appeal unless the deposit is made, and that an
appellate authority which dismisses an appeal upon that ground
commits no error.
14. Having heard these rival contentions and perused the materials
available on record, this Tribunal finds that four questions arise for
determination:
i. Whether appeals presented within time but unaccompanied
by the statutory deposit could be dismissed in the manner in
which the Commissioner (Appeals) dismissed them?
ii. Whether this Tribunal, hearing an appeal from an order
which did not touch the merits, may dispose of these
appeals finally or must remit them?
iii. Whether the notices dated 17.11.2015 and 30.11.2015
could be issued under Section 28 of the Act while the
Department's own appeals against the orders sanctioning
refund were pending, and, if so, upon what footing they
stood?
iv. Whether anything survives of these demands in the light of
the Final Orders since passed by this Tribunal?
15. These questions are considered in seriatim . On the first question,
this Tribunal is unable to accept the appellant's contention as it
was framed. Section 129E, as substituted with effect from
06.08.2014, provides by clause (i) that the Commissioner
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(Appeals) shall not entertain an appeal under sub section (1) of
Section 128 unless the appellant has deposited seven and a half
per cent of the duty in dispute, and by clause (iii) that the Tribunal
shall not entertain an appeal against an order referred to in clause
(b) of sub section (1) of Section 129A, that is to say an order of
the Commissioner (Appeals), unless the appellant has deposited
ten per cent of the duty in dispute. The deposit required of an
appellant before the first appellate authority and that required of
an appellant before this Tribunal are therefore distinct obligations
attaching to distinct appeals. The sum of Rs.1,25,272/- deposited
on the institution of these appeals is the deposit which clause (iii)
requires for these appeals, and it cannot be read as retrospective
compliance with clause (i), which governed the appeals filed
before the Commissioner (Appeals). To the extent that the
appellant contends that the requirement of Section 129E stood
duly complied with before that authority, the contention fails. The
discretion to dispense with the deposit which the earlier provision
conferred has been withdrawn, and to that limited extent the
Calcutta High Court in Sunil Kumar Patwari supra correctly states
the position that the appellate authority is powerless to entertain
an appeal unaccompanied by the deposit.
16. That is not, however, the end of the matter, and the impugned
order cannot be sustained upon the reasoning it adopts. An appeal
presented within time but unaccompanied by the statutory deposit
is a defective appeal and not a nullity. The embargo in Section
129E is upon entertaining such an appeal. It is neither a
prohibition upon its presentation nor a command to extinguish,
unheard, an appeal which the appellant remains able to perfect. A
Division Bench of the Bombay High Court, construing the
corresponding provision in Section 35F of the Central Excise Act,
1944 as amended in 2014 and applied to service tax, said as much
in Sportina Payce Infrastructure Pvt. Ltd. v. Union of India, 2019
(365) E.L.T. 439 (Bom.) , holding that the provision only prohibits
the appellate authority from entertaining the appeal on merits,
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that where the deposit is made within a reasonable time of the
dismissal the appellate authority should recall the order of
dismissal and hear the appeal, and that such a recall is a
procedural review which every quasi judicial authority may make
in its inherent jurisdiction even in the absence of an express
power. The Hon’ble High Court relied upon the principle laid down
in Grindlays Bank Ltd. v. Central Government Industrial Tribunal,
1980 (Supp.) SCC 420 in this regard. The jurisdictional High Court
had held likewise, and in stronger terms, in Classic Builders
(Madras) Pvt. Ltd. v. CESTAT, Chennai, 2016 (42) S.T.R. 668
(Mad.) . That was a service tax appeal governed by Section 35F of
the Central Excise Act, 1944, which Section 83 of the Finance Act,
1994 applies to service tax and which is in pari materia with
Section 129E of the Act, and the dismissal under challenge had
been made by this Tribunal in 2013, under the provision as it
stood before the amendment of 2014. The Division Bench held
that where the statute does not prohibit restoration of an appeal
dismissed for want of the deposit, the power to restore exists and
is inherent, and that the Tribunal cannot deprive a party of the
substantive right to prefer an appeal on the mere ground that
there is a violation of procedure. If procedure, which is the
handmaid of justice, were entrusted with the power of the
mistress, the Court observed, the consequences would be
disastrous, and substantive justice cannot be permitted to take
the back seat, allowing the procedure to occupy the front seat.
That principle applies with greater force under the provision as it
now stands. The default in that case was in breach of a specific
direction of the Tribunal, whereas here there was no direction at
all, only a statutory condition which the appellant remained free to
satisfy. If an order of dismissal may be recalled upon a belated
deposit, it follows a fortiori that the deficiency ought to have been
pointed out before the appeal was dismissed at all.
17. The reasons which the Commissioner (Appeals) gave for denying
the appellant even that much do not withstand scrutiny, and this
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Tribunal is constrained to record its disapproval of them. He held it
against the appellant that the appeals had been presented on the
ninetieth day. A party which presents an appeal on the last day
available to it exercises a right the statute confers and commits no
delinquency, and the imminence of the expiry of limitation is a
circumstance affecting the appellant's own position and not a
dispensation from the duty of the authority to hear. He held it
against the appellant that the appeals had been routed through
the Sevottam counter, a facility created by the Department itself
for the convenience of the citizen. An assessee cannot be visited
with an adverse consequence for using a channel which the
Department has created for the receipt of papers. He then
declined a personal hearing altogether, although Section 128A(1)
of the Act obliges the Commissioner (Appeals) to give an appellant
an opportunity of being heard if it so desires, and although
nothing prevented him from issuing a short notice of the
deficiency. The principles of natural justice required at the least
that an appellant whose appeal was to be dismissed for a curable
defect be told of that defect before the dismissal. The shortness of
the time remaining was, upon his own showing, a consequence of
the date on which the appeal reached him, and it furnished no
warrant for setting aside the elementary obligation to hear before
deciding. Rules of procedure are the handmaids of justice and not
its mistress, and where a party is not guilty of laches and nothing
forbids relief, one should not get entangled in the cobweb of
procedure but should do substantial justice, as the Supreme Court
put it in Commissioner of Sales Tax, U.P. v. Auriaya Chamber of
Commerce, Allahabad, 1986 (25) E.L.T. 867 (S.C.) . The
admonition in Madras Port Trust v. Hymanshu International, 1979
(4) E.L.T. (J 396) (S.C.) , that it is high time governments and
public authorities ceased to rely upon technical pleas for the
purpose of defeating the legitimate claims of citizens and did what
is fair and just, applies with full force to the manner in which these
two appeals were disposed of.
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18. In fairness to the Revenue, it has to be said that the appellant was
not free from blame. The amended Section 129E had been in force
for more than two years when these appeals were filed, and
greater vigilance would have avoided much of this controversy.
The default was nevertheless curable, and the consequence visited
upon it was not one the statute authorises. It is therefore held
that the dismissal of the appeals without notice of the deficiency
and without any hearing cannot be sustained.
19. The second question, i.e., whether this Tribunal, hearing an appeal
from an order which did not touch the merits, may dispose of
these appeals finally or must remit them, needs a closer look. It is
noticed that in Commissioner of Central Excise, Chandigarh v.
SmithKline Beecham Consumer Health Care Ltd., 2003 (157)
E.L.T. 497 (S.C.) , the Commissioner (Appeals) had dismissed an
appeal for failure to comply with a direction for pre deposit and
had not gone into the merits. The Hon’ble Supreme Court
observed that the only question before the Tribunal was whether
pre deposit was required or not, that the Tribunal had chosen to
go into the merits and to decide the appeal on merits also, and
that this should not have been done. The order then records that
the parties were agreed that the matter be sent back to the
Commissioner (Appeals) with the pre deposit dispensed with, and
it was so directed.
20. That decision belongs to a statutory regime which no longer
exists. Under the proviso to the corresponding provision as it then
stood, the appellate authority had a discretion, upon an
application, to dispense with the deposit, and it was in the
exercise of that discretion that the direction in SmithKline
Beecham came to be made. The Tribunal's scrutiny was
accordingly directed at the correctness of a discretionary direction,
which is precisely why the permissible question was framed as
whether pre deposit was required or not. Under Section 129E as
substituted there is no application, no direction and no discretion.
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The deposit is a statutory condition of the same order as the
period of limitation, and the question whether it was required or
not no longer exists. The relief which the Supreme Court granted,
namely a remand upon the deposit being waived, is equally a
relief which no appellate forum can now grant. A decision whose
premise and whose remedy have both been removed by
amendment cannot be applied mechanically to the altered
provision.
21. This Tribunal is conscious that distinguishing the regime does not
by itself answer the caution which underlies that decision, which is
that an appellate forum ought not to decide what the forum below
has never considered. A further consideration governs the present
case which was not present in SmithKline Beecham , and it is
decisive. The demands under challenge before this Tribunal claim
no life of their own. Each of the two demand notices states
expressly that the liability to repay arises in view of an order of
the Commissioner (Appeals) or of this Tribunal, and each of those
orders has since been set aside or recalled by this Tribunal. To
hold that a demand falls with the order upon which it is expressly
founded is not to adjudicate the merits afresh. It is to work out
the consequences of this Tribunal's own orders, which is an
exercise in judicial discipline and not in original adjudication. It is
upon this consideration that the competence of this Tribunal to
dispose of these appeals finally rests.
22. The Supreme Court has lately restated, in Maria Martins v. Noel
Zuzarte, 2026 INSC 376 , the three conditions upon which a court
may take note of subsequent events, namely that the event be
brought promptly to its notice, that it be brought consistently with
the rules of procedure so that the opposite party has an
opportunity of meeting or explaining it, and that it have a material
bearing upon the right to relief. Each is satisfied here. The Final
Orders were placed before this Tribunal by an application under
Rule 23 of the Customs, Excise and Service Tax Appellate Tribunal
13
(Procedure) Rules, 1982, the learned Authorised Representative
had full opportunity to deal with them, and they go to the whole of
the relief claimed.
23. Now to address the third question, it can be seen that the
appellant's case, put at its highest, is that an order sanctioning
refund under Section 27 is an order of adjudication, that the only
remedies against it are an appeal under Section 128 or a direction
under Section 129D, and that Section 28 can never be invoked to
recover what has been sanctioned by such an order. For that
proposition reliance was placed principally upon Eveready
Industries India Ltd. v. CESTAT, Chennai, 2016 (337) E.L.T. 189
(Mad.) , where the jurisdictional High Court held that once an
application for refund is allowed upon adjudication the expression
erroneous refund cannot be applied to the amount refunded, and
that one authority cannot be permitted to say in a collateral
proceeding that what was done by another authority was an
erroneous thing. The same approach is found in Commissioner of
Customs and Central Excise, Tirupati v. Panyam Cements and
Minerals Industries Ltd., 2016 (331) E.L.T. 206 (A.P.) , and in
Shyam Timber Pvt. Ltd. v. Commissioner of Customs, (2023) 9
Centax 287 (Tri. Ahmd.) .
24. Attractive as the proposition is, this Tribunal is unable to accept it
in that absolute form, and says so because authority which binds
this Tribunal points the other way. In Grasim Industries Ltd. v.
Commissioner of Central Excise, Bhopal, 2011 (271) E.L.T. 164
(S.C.) , the Supreme Court held in paragraph 13 that the recovery
provision confers a right to issue a show cause notice where,
according to the Department, duty has been erroneously
refunded, that upon such a notice the assessee has to show cause
why the amount should not be recovered from him, and that in
such a case there is no question of filing any appeal, the
appropriate remedy provided by that provision being available.
Earlier, in Asian Paints (India) Ltd. v. Collector of Central Excise,
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Bombay, 2002 (142) E.L.T. 522 (S.C.) , the Court had held that
the recovery provision and the review provision operate in
different fields and are invoked for different purposes, and that to
read them otherwise would render the review provision virtually
ineffective.
25. That reasoning was reaffirmed, and with some emphasis, in
Commissioner of Central Excise, Mumbai I v. Morarjee Gokuldas
Spg. and Wvg. Co. Ltd., (2023) 4 Centax 418 (S.C.) . In this case,
the Hon’ble Supreme Court recorded its disapproval of a High
Court which had declined to follow Asian Paints although that
decision had been pressed upon it, and held in paragraph 8 that
once an order in original sanctioning refund has been set aside in
a proceeding under the review provision taken within the time
prescribed by it, there is no question of any further notice under
the recovery provision, the necessary consequence following from
the order of review itself. The jurisdictional High Court has also
taken this view in a later decision. In Premier Cotton Textiles v.
Commissioner of CGST, Coimbatore, 2019 (368) E.L.T. 465
(Mad.) , where notices had been issued to recover a rebate already
allowed without any appeal having been filed against the order
allowing it, the Court held that the recovery provision
contemplates five distinct situations of which duty erroneously
refunded is the fifth, that to accept the argument now advanced
would render that fifth limb otiose, and that the provision must be
read in the manner laid down in Grasim Industries and by the
Larger Bench of the Tribunal whose view Asian Paints approved.
That the Court was exercising writ jurisdiction at the stage of a
notice, and declined to interfere for that additional reason, does
not detract from the reasoning upon the interplay of the two
provisions, which is express.
26. It is right to record that Grasim Industries does not appear to
have been placed before the Division Bench which decided
Eveready Industries , for it finds no mention among the authorities
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there considered, and that the High Court of Andhra Pradesh in
Panyam Cements distinguished Grasim Industries upon the footing
that the claimant there was not the person who had borne the
incidence of duty. This Tribunal need not pause upon whether that
distinction is a sufficient answer to what was said in paragraph 13
of Grasim Industries, for the resolution of that question is not
necessary to the decision here. It is enough to hold, as this
Tribunal holds, that the broad proposition that Section 28 can
never be invoked to recover a refund sanctioned upon adjudication
cannot be accepted in the face of Grasim Industries, Asian Paints
and Morarjee Gokuldas . To that extent the foremost of the
grounds urged by the appellant fails. These three decisions were
not cited at the Bar, but that does not relieve this Tribunal of the
obligation to apply them. The law declared by the Supreme Court
binds every court and tribunal in the country under Article 141 of
the Constitution. The Supreme Court has recently emphasised, in
New India Assurance Company Limited v. Dolly Satish Gandhi and
Anr., 2026 INSC 498 , that while counsel owe a duty to bring to
the notice of the Court judgments that do not aid their case as
well as those that do, the entire burden cannot be placed on
counsel, and that the Court itself has “an independent tri-fold
duty, to apply correct law even if the counsel does not cite the
same, ensure consistency with precedent, and avoid per incuriam
decisions”. The omission is the more noticeable on the side of the
Revenue, in whose favour these decisions run. To have answered
the question of the Department’s power under Section 28 without
regard to these decisions would have been to render precisely the
kind of decision against which that caution is directed. The issue to
which they have been applied, namely whether Section 28 could
be invoked at all, was the appellant’s own principal ground, and
the one on which its learned counsel, upon seeking and obtaining
leave to file written submissions, had further elaborated. This
Tribunal has therefore done no more than answer, according to
the law that binds it, the very question the appellant put before it.
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27. S.K. Timber and Co . calls for a word of its own, both because the
written submissions rested heavily upon it and because it is a
decision of this Tribunal. It is a decision of a coordinate Bench and
is distinguishable for the reason that what was decided there
turned upon a feature which the Bench expressly recorded as
being beyond dispute; and which is absent here; namely that the
order sanctioning the refund had never been reviewed and never
been challenged at all. In such circumstances, the notice under
Section 28 having been issued some three and a half years after
the sanction, was stated to be upon a mere presumption that the
refund was erroneous. It was in that setting that the Bench held
that the Revenue could not reopen the matter without first
resorting to Section 128. The position before this Tribunal is the
converse. The Department did review the orders in original under
Section 129D, did carry them before the Commissioner (Appeals)
under Section 128, and did succeed there. S.K. Timber and Co.
therefore does not govern this case. Nor can it be read as holding
that a notice under Section 28 becomes impermissible once the
Department has also resorted to Section 128, for no such question
arose before that Bench.
28. This Tribunal must also record, with respect, a reservation upon
the width of what is said in that decision. The sole authority
invoked there upon the point was ITC Ltd. v. Commissioner of
Central Excise, Kolkata IV, 2019 (368) E.L.T. 216 (S.C.) , which
holds that the expression any person in Section 128 is of wide
amplitude and that an order of self assessment is itself
appealable. That decision governs the appealability of
assessments and the necessity of having an assessment modified
before refund is claimed upon it. It does not consider Section 28,
which itself contemplates the recovery of duty erroneously
refunded, and it cannot be read as having withdrawn that limb of
the section. Neither Grasim Industries nor Asian Paints appears to
have been placed before that Bench, and Morarjee Gokuldas was
then two years away. To the extent that S.K. Timber and Co . is
17
read as laying down the broad proposition that recourse to Section
28 is never open while an order sanctioning refund subsists, this
Tribunal is unable, with respect, to follow it.
29. The appellant's objection does not succeed in its narrower form
either. That form of the argument is that, whatever the general
competence of the Department under Section 28, the course
actually adopted was impermissible, since upon a single set of
observations made in review the Department set two proceedings
in motion, the one before the Commissioner (Appeals) and the
other before the officer whose orders were under challenge in that
appeal, upon the identical ground and in respect of the identical
sums. The argument cannot be accepted. Grasim Industries and
Asian Paints hold that the recovery provision and the review
provision operate in different fields, and the Department's resort
to the one did not disable it from the other. A notice of this kind
issued while the appeal is pending serves an evident purpose.
Section 28(1), as it then stood, required the notice to be issued
within one year from the relevant date, which for duty erroneously
refunded is the date of refund. The Department could not tell
when its appeals would be decided, and the second of them was in
fact decided only on 11.03.2016, more than thirteen months after
the refund in question had been sanctioned. It is true that upon
Asian Paints and Morarjee Gokuldas a successful review would
itself have carried the recovery, so that no notice under Section 28
was in law necessary. But a precaution which the law renders
unnecessary is not on that account an abuse of a power which the
law confers.
30. Nor does the record bear out the apprehension that the officer
prejudged the appeals or exposed the appellant to recovery twice
over. He did not adjudicate the notices until the appellate orders
had been passed, and when he did, he confirmed the demands
upon nothing but those orders. The notices thus operated, in
substance, as notices in aid of the Department's appeals, and the
18
rule that a quasi judicial authority cannot review its own order
does not touch a power which Section 28 expressly confers. The
third question is accordingly answered against the appellant. The
notices were open to the Department to issue, and they stood or
fell with the appellate orders in aid of which they came to be
adjudicated. This Tribunal cannot, however, leave the notices
without a remark upon the manner of their preparation. Neither
notice says that it is issued to protect the revenue pending the
Department's appeals, or so much as mentions those appeals.
Each simply adopts the observations made in review and proposes
recovery as though no other proceeding were pending upon the
same question. A notice which proposes to recover money from a
citizen is not a formality. Where it is issued to protect the revenue
pending an appeal, it should say so, so that the assessee knows
the basis upon which it is called upon to answer, and it should be
prepared with the care its consequences demand.
31. The fourth question admits of a short answer, for upon the record
nothing survives of these demands. Confirmed Demand Notice
No.30/2016 dated 16.12.2016 confirmed the demand of
Rs.9,59,242/- upon the stated premise that, in view of Final Order
No.41872/2016 dated 10.10.2016, the appellant was liable to
repay. That Final Order was an ex parte order which this Tribunal
recalled, and in its place the appeal was allowed by Final Order
No.41377 to 41380/2017 dated 28.07.2017. Confirmed Demand
Notice No.33/2016 dated 26.12.2016 confirmed the demand of
Rs.2,93,478/- upon the stated footing that, in view of the findings
of the Commissioner (Appeals) in Order in Appeal No.1215 to
1217/2015, the appellant was liable to repay. That Order in
Appeal was set aside by this Tribunal by Final Order No.40889 to
40898/2017 dated 02.06.2017. Each demand therefore rests upon
a foundation which has been removed, and a demand which is
expressly consequential upon an order cannot outlive that order.
The same conclusion follows from the character of the show cause
notices themselves. As held in answer to the third question, Show
19
Cause cum Demand Notice No.46/2015 and Show Cause cum
Demand Notice No.60/2015 were not adjudicated upon any
independent assessment of the refund claims. They were kept
pending until the Department's appeals had succeeded, and were
then confirmed solely on the strength of Order in Appeal No.1215
to 1217/2015 and Final Order No.41872/2016 respectively. Once
this Tribunal set aside the first of those orders and recalled the
second, and held on merits that the refunds had been rightly
sanctioned, the only basis upon which the notices were confirmed
ceased to exist, and the confirmed demands fall with it. Morarjee
Gokuldas bolsters this view. It holds that where an order
sanctioning refund is set aside in proceedings taken on review, the
recovery follows from the order passed in those proceedings, and
no separate notice under the recovery provision is required. A
demand confirmed under Section 28 for no reason other than that
the review had succeeded is therefore no more than a means of
giving effect to the outcome of that review, and it cannot be
enforced once that outcome has been reversed.
32. The substantive dispute has fared no better. The single ground
upon which the refunds were said to be erroneous was that a sale
bearing a nil rate of value added tax is not a sale upon which
appropriate tax has been paid. That ground was rejected by this
Tribunal in the appellant's own case, upon these very refund
applications and these very orders in original, by the two Final
Orders already mentioned, following Gazal Overseas supra . Both
have attained finality and bind the parties. There is accordingly no
subsisting foundation, whether formal or substantive, upon which
these demands can survive.
33. It remains to consider whether this Tribunal should nonetheless
remit these appeals to the Commissioner (Appeals) so that they
may be heard upon the deficiency being made good, which is the
course adopted in Sportina Payce and in Classic Builders . The
answer lies in the difference between those cases and this one.
20
There the merits were alive and had never been examined by
anyone, so that restoration restored something capable of
decision. Here the orders upon which the demands were founded
have been set aside by this Tribunal and the substantive question
stands concluded between these very parties. The Commissioner
(Appeals) upon remand could do nothing but record as much,
judicial discipline leaving him no choice but to follow the Final
Orders of this Tribunal. A remand whose outcome is foreclosed is
an empty formality.
34. The law is set against remands of that kind. The Bombay High
Court held in Commissioner of Central Excise, Pune I v. Syntel
International (P) Ltd., 2015 (39) S.T.R. 27 (Bom.) , that though
the power to remand is implicit in appellate power it ought not to
be exercised routinely, and that it is particularly to be avoided in
revenue matters, which should attain finality expeditiously. The
Supreme Court reaffirmed the same approach in Suvej Singh v.
Ram Naresh, 2025 INSC 1405, observing that while the earlier
view was to remit wherever the principles of natural justice had
been breached, that view has changed with the passage of time,
the object being to curtail litigation and not to generate it, and
that any unnecessary remand by a higher court generates a fresh
round of litigation which should be avoided. That authority is relied
upon only on the question whether to remit, and not as displacing
SmithKline Beecham , which addresses a different question,
namely the scope of the Tribunal's jurisdiction in an appeal from
an order which did not reach the merits. These appeals concern
imports of 2012 and 2013 and refunds sanctioned in 2014. To
send the parties back now would serve no purpose the law
recognises.
35. Before concluding, this Tribunal must say a word upon the whole
course of these proceedings. The sum at stake is Rs.12,52,720/-.
To hold on to it, the appellant has been made to contest two sets
of proceedings running abreast upon one and the same question,
21
through two rounds before the first appellate authority and two
rounds before this Tribunal, over more than a decade, upon a
question which this Tribunal had decided in Gazal Overseas on
02.09.2015, before the first of the show cause notices was even
issued. Speaking of a comparable experience in Aluminium
Corporation of India Ltd. v. Union of India, 1978 (2) E.L.T. 452
(S.C.) , Krishna Iyer, J. observed that to return what has been
taken wrongly is as much a duty and grace of government as to
levy relentlessly and fully what is due, that default in either brings
down the confidence of the community in the Administration, and
that it is regrettable that a party should have been put to two
expensive and elongated litigations to recover a relatively small
sum. Those words fit this case. No authority may retain money
which the law gives it no title to keep, as was held in Salonah Tea
Company Ltd. v. Superintendent of Taxes, Nowgong, 1988 (33)
E.L.T. 249 (S.C.) , and whatever has been recovered from the
appellant in enforcement of these demands, together with the
amount deposited under Section 129E, must accordingly go back
to it.
36. The conclusions are summarised as follows. The appeals presented
to the Commissioner (Appeals) were defective and not non est ,
the defect was curable, and their dismissal without notice of the
deficiency and without any hearing was contrary to Section
128A(1) of the Act and to the principles of natural justice, though
the appellant's contention that Section 129E stood complied with
before that authority is not accepted. The broad proposition that
Section 28 can never be invoked to recover a refund sanctioned
upon adjudication is not accepted either. The notices were not
invalid for having been issued while the Department's own appeals
upon the very same ground were pending, but having been
adjudicated in aid of those appeals and confirmed upon nothing
but the orders passed in them, they stood or fell with those
orders. Nothing survives of the demands, each being expressly
consequential upon an order which this Tribunal has set aside or
22
recalled, and the substantive question having been concluded in
the appellant's favour by Final Orders which have become final. No
useful purpose would be served by a remand. The impugned order
is accordingly liable to be set aside and the appeals are to be
allowed.
37. In view of the aforesaid analysis, the impugned Order in Appeal C.
Cus. II No.357 and 358/2017 dated 26.04.2017 is set aside.
Confirmed Demand Notice No.30/2016 dated 16.12.2016 and
Confirmed Demand Notice No.33/2016 dated 26.12.2016, and the
proceedings initiated by Show Cause cum Demand Notice
No.46/2015 dated 17.11.2015 and Show Cause cum Demand
Notice No.60/2015 dated 30.11.2015, are set aside. Customs
Appeal Nos.41713 and 41714 of 2017 are allowed with
consequential relief in law, if any, including refund of the sum of
Rs.1,25,272/- deposited under Section 129E of the Act and of any
amount recovered from the appellant in enforcement of the
demands hereby set aside.
(Order pronounced in the open court on 28.10.2026)
(AJAYAN T.V)
Member (Judicial)
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