1. When this appeal earlier came up for hearing on 30.06.2003, the matter was adjourned by the Bench to await the decision of the Larger Bench in the reference made by the Bangalore Bench in the case of Faxtel Systems (India) Pvt. Ltd. v. C.C. Cochin - 2003 (56) R.L.T. 652 (CEGAT-Ban.). The learned Chartered Accountant for the appellants informs that the Larger Bench has not yet decided the reference.
2. After hearing both sides, I find that on this issue there are two decisions of the Honourable Supreme Court and that the matter can be decided applying the ratio of the Apex Court decisions. Hence, I am of the view that it is not necessary either to refer to the conflicting decisions of Tribunal Benches or to await the decision of the Larger Bench on such conflicting decisions and I proceed to decide the appeal, which is pending for over 6 years and relates to a refund claim filed in August, 1995.
3. Section 27 of the Customs Act, 1962 inter alia allows filing of a refund claim of duty paid 'in pursuance of an order of assessment'. The appellants have filed such a claim within the permissible time period of 6 months. The lower authorities have rejected the claim on the ground that refund has been claimed seeking classification under heading 85.36 whereas the appellants have not appealed against the assessment in the Bill of Entry (B/E) which classified the impugned goods under heading 85.48. This is a case, where assessment has been done on the B/E without issuing a Show Cause Notice to the appellants, without hearing them and without passing an appealable adjudication order. In the case of CCE., Kanpur v. Flock India Pvt. Ltd. - 2000 (120) ELT 285 (S.C.), the Apex Court has ruled that if no appeal has been filed against an appealable order deciding classification of a product, it is not open to an assessee to seek reclassification through a refund claim. Though the ruling was given in an excise case, the ratio being of general import, is equally binding in customs cases as the legal provisions under both the laws are similar. However, in the instant case, no appealable order has been passed. Had there been an adjudication and issue of an appealable order after following the principles of natural justice, the only option open to the appellants, as has been ruled in the Apex Court in the aforecited case, would have been to file an appeal against the same and depending on their success in such appeal, get a consequential refund.
4. In the instant case, no appealable order has been issued. The appellants have paid duty 'in pursuance of an order of an assessment' on the B/E. They have subsequently filed a refund claim within the time limit prescribed under Section 27. In a similar case, the Apex Court has ruled vide Karnataka Power Corporation Ltd. v. C.C. (Appeals), Chennai - 2002 (143) E.L.T. 482 (S.C.) to the effect that re-classification/re-assessment can be sought alongwith the refund claim.
5. There is no conflict between these two decisions of the Apex Court cited above. In fact, both compliment each other by addressing two different situations and allow a harmonious interpretation of the statutory provisions. These decisions read together require a speaking appealable order to be issued at the level of Assistant/Deputy Commissioner either at the stage of assessment of the B/E or at the stage of consideration of refund claim/reassessment. If a speaking appealable order has been passed on initial assessment stage, the assessee has to appeal against the same and can get a consequential refund on succeeding in his appeal. If no such appealable order has been issued at the stage of initial assessment of the B/E, the assessee can take recourse to filing a refund claim under Section 27 and seek a reassessment. To deny an assessee the option to seek reassessment through a refund claim under Section 27, where no appealable order has been passed while assessing the B/E, would render Section 27 redundant and would run counter to the decision of the Apex court in the case of Karnataka Power (Supra).
6. No doubt, appeals against any decision or order including a B/E can be filed under Section 128(1) of the Customs Act, 1962. But obviously, no modern customs administration worth the name should either refuse to pass an appealable order in a disputed case or insist on filing of appeal against a bland assessment order on a B/E. Such an appeal, in any case, would deprive the appellate authority of knowing the department's view point in the absence of a reasoned order and also push up the level of first consideration to the appellate level, both outcomes are clearly avoidable in the interest of sound tax administration.
7. In view of my findings as above, I set aside the impugned orders passed by the lower authorities and remand the case back to the original authority for consideration of the refund claim on merits including the question of reassessment under a different classification.