In Customs Appeal No. 10536 of 2020 -CESTAT- CESTAT (Ahmedabad) rules in favour of Reliance Industries, upholds refund claims for export duty paid under protest on iron & steel products supplied from DTA
Members Somesh Arora (Judicial) & C.L. Mahar (Technical) [27-09-2023]

Read Order: Commissioner of Customs –JAMNAGAR v. Reliance Industries Limited

Chahat Varma

New Delhi, October 4, 2023: The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal has upheld the refund claims of Reliance Industries Limited (RIL), for export duty paid under protest on iron and steel products supplied from the Domestic Tariff Area (DTA).

In this case, RIL (respondent-assessee), operated a Special Economic Zone (SEZ) in Jamnagar and received iron and steel materials/products from the DTA unit. The Government of India had imposed export duty on iron and steel products when exported out of India through Notification No. 66/2008 dated 10.05.2008. As a result, the respondent-assessee SEZ paid export duty on all supplies of iron and steel products, doing so ‘under protest’. A legal challenge arose concerning the payment of export duty on iron and steel products supplied to SEZ in India, particularly targeting Notification No. 66/2008 dated 10.05.2008. The matter was taken before the Gujarat High Court, which, in its order dated 04.11.2009, had ruled that the imposition of export duty on goods supplied from DTA to SEZ was not justified. Subsequently, the Revenue (tax authorities) appealed this decision to the Supreme Court. However, the Supreme Court, in its order dated 12.07.2010, dismissed the Special Leave Petition filed by the Revenue, thereby upholding the Gujarat High Court's ruling. Following the Supreme Court's dismissal of the case, the respondent-assessee had filed four refund claims, seeking a refund of the export duty they had previously paid.

Despite this, the Deputy Commissioner of Customs had rejected the refund claims made by the respondent-assessee. The reason given for the rejection was that the respondent-assessee had not been a party to the proceedings before the Supreme Court, and the assessment order of the relevant bills of export had not been challenged. Consequently, the refund claims were denied by the tax authorities.

The respondent-assessee, dissatisfied with the order, proceeded to file an appeal before the Commissioner (Appeals). The Commissioner (Appeals) allowed the respondent-assessee's appeal by overturning the Deputy Commissioner's earlier decision and sending the matter back to the lower authority. The lower authority was instructed to process the refund claims on their merits while adhering to legal provisions and the judgments of the High Court on the matter. In response to the order issued by the Commissioner (Appeals), the Deputy Commissioner subsequently approved the refund claims. However, the department was not satisfied with the decision of the Deputy Commissioner and decided to challenge it before the Commissioner of Customs (Appeals). The Commissioner of Customs (Appeals), in an order dated 29.05.2020, rejected the department's appeal, thereby upholding the decision in favour of the respondent-assessee.

The two-member bench of Somesh Arora (Judicial) and C.L. Mahar (Technical) noted that the Commissioner of Customs (Appeals) had already thoroughly reviewed and considered all the submissions put forth by the appellant-department in their appeals.

The bench further expressed its opinion that the mere existence of a pending review petition before the Apex Court could not serve as a sufficient reason to overturn the challenged order-in-appeal.

The bench emphasized that, as of now, the Gujarat High Court's order had neither been set aside nor stayed by the Apex Court. Given that the Gujarat High Court's order remained in effect, the bench concluded that there was no illegality in the impugned order-in-appeal issued by the Commissioner (Appeals).

Consequently, the bench found that the appeals lacked merit and proceeded to dismiss them.