Cus - SAD Refunds - In case of provisional assessments, claim for refund can be made within one year of finalisation of assessment: Delhi HC
By TIOL News Service
NEW DELHI, SEPT 27, 2013: THE petitioner has filed the present petition impugning the Circular No. 23 /2010-Customs
dated 29.7.2010 and the notification No. 93/2008-Customs dated 1.8.2008. The petitioner further prays for setting aside of the orders dated 21.3.2011 and 27.4.2011 passed by the Commissioner of Customs (Appeals) relying on the impugned Circular No. 23/2010-Customs dated 29.7.2010 and further sought a writ of mandamus seeking refund of the provisional duty paid amounting to Rs. 94,43,216/-.
On 14.09.2007 notification No. 102/2007-Customs was issued by the Ministry of Finance, Government of India in exercise of powers conferred by Sub-section 1 of Section 25 of the Act. Vide the said notification, the Central Government exempted the goods falling within the first schedule to the Customs Tariff Act, 1975 when imported into India for subsequent sale from the whole of the additional duty of Customs leviable thereon under Sub-section 5 of Section 3 of the said Customs Tariff Act.
In this notification dated 14th September, 2007, no period of limitation was prescribed for making an application for refund of CVD. The notification postulated furnishing of documents evidencing payment of additional duty, invoices of sale of imported goods for which refund of additional duty was claimed and evidence of payment of appropriate sales tax or value added tax. The absence of stipulation of any period of limitation leads to the clear implication that the refund would be processed under Section 27 of the Act.
On 28.04.2008 the Central Board of Excise and Customs issued Circular No. 6 of 2008-Customs, on account of various representations being made by the importers, exporters, Trade and Industry Association and had reference from some of the Customs Fields Formations. One of the issues dealt with by the said circular related to the fixation of time limit for filing an application for refund.
Circular No. 6/2008 dated 16th April, 2008 noticed that no specific time limit was fixed in notification dated 14th September, 2007. Doubts had been expressed as to whether Section 27 of the Act would apply. The circular purports to clarify that in the absence of specific stipulation in the notification, which made Section 27 of the Act applicable, the time limit prescribed in Section 27 of the Act would not be applicable automatically. The circular records that representations had been received from the importers, who had found it difficult to dispose of the exported goods and complete the requisite documentation within the normal period of six months. This period of six months is specified in Section 27 of the Act. The Board keeping in view the aforesaid factors had decided to permit importers to file claims for exemption upto a period of one year, i.e., the time limit specified in Section 27 of six months, was extended to one year.
Subsequent to the issuance of circular No. 6 of 2008 the Central Government issued a notification No. 93/2008 on 1.8.2008. This is the new notification issued by the Central Government on 1st August, 2008, which made amendment to paragraph 2 (c) of the earlier notification dated 14th September, 2007. Instead of time limit being fixed by the circular, the time limit for making claim for refund of additional duty was specified in the notification itself. The time limit as prescribed for making the said claim was one year from the date of payment of the additional duty on customs.
Observing that divergent practices were being followed as regard sanction of the refund claims in cases where the assessments were provisional, the Central Government issued circular No.23 of 2010-Customs on 29.7.2010.
Circular dated 29th July, 2010 seeks to explain notification No. 93 of 2008 dated 1st August, 2008 and states as under:
(i) Limitation of time specified for refunds under Section 27 of the Act is not applicable.
(ii) Claims of refunds of 4% CVD under Circular dated 28th April, 2008 should be filed within one year of payment of duty, whether the assessment was provisional or final was immaterial.
The reason given is that the notification has been issued under Section 25(1) of the Act and is subject to fulfilment of certain conditions; one of them being that the claim for refund should be made within one year from the date of payment of duty. Thus, in cases where assessment was provisional, date of payment of duty for CVD would be the actual date of payment and not the date of finalization of provisional assessment. In other words, the order finalizing the assessment will not determine the limitation of one year for refund of duty. The date of finalization of assessment is, therefore, rendered inconsequential. The importer is entitled to refund only if the claim is made within one year from the date of payment of actual duty, whether it was paid as provisional assessment or on the basis of final assessment.
The main issue which arises for consideration in the present petition is whether the Central Government while imposing conditions for grant of exemption under Section 25(1) of the Act could lay down conditions in derogation to the specific statutory provisions and stipulations contained in Section 27 of the Act.
At the outset, the High Court "Section 27 of the Act applies because of the statute i.e. the Act and does not require clutches of a notification for application. The aforesaid clarification in form of a circular can be also challenged and questioned to the extent that it withdraws or curtails beneficial provisions of Section 27 of the Act."
The High Court felt it will be proper to harmoniously construe and interpret notification dated 1st August, 2008 and Section 27 read with Circular dated 29th July, 2010 by holding that an Assessee can make a claim for refund under notification No. 93 of 2008 dated 1st August, 2008 either by filing an application for refund within the limitation period specified under Section 27 of the Customs Act, 1962 or within the extended limitation period of one year from the actual date of payment even, if the said payment made was pursuant to provisional assessment. The longer of the two periods i.e. the period specified under Section 27 or the notification dated 1st August, 2008 read with Circular No. 23/2010-Custom dated 29th July, 2010 would be applicable.
To sum up:
a. where the imported goods are released on payment of CVD on regular assessment, the application seeking refund can be made within one year of the payment of the CVD in terms of the notification dated 1st August, 2008 read with Circular No. 23/2010-Custom dated 29th July, 2010.
b. where the goods are released on provisional assessment followed by the final assessment, the application seeking refund can be made within the period of one year or six months, as the case may be, of the final assessment as stipulated by Explanation II to section 27 of the Act or within the enlarged period of one year from the date of provisional release as stipulated by the notification dated 1st August, 2008 read with Circular No. 23/2010-Custom s dated 29th July, 2010.
In view of the above, the impugned Circular No. 23/2010-Custom to the extent it holds that section 27 of the Act has no application is held ultra-vires the statute and quashed. The impugned orders dated 21.3.2011 and 27.4.2011 passed by respondent No.2 relying on Circular No. 23/2010-Custom dated 29.07.2010 are hereby set aside and the matter is remanded to respondent No.2 to assess the claim of the petitioner for refund on imports and to process the same in accordance with the provisions of Section 27 of the Act.
Please also see DDT 1413-30.07.2010
(See 2013-TIOL-731-HC-DEL-CUS)
