Cus - Cause for filing application for refund arose only when the export actually failed - Interpretation that would lead to anomalous and unintended consequences must be avoided: High Court
By TIOL News Service
AHMEDABAD, JAN 10, 2018: THE petitioner has challenged the order dated 20.06.2016 - 2016-TIOL-2920-CESTAT-AHM passed by the CESTAT wherein it is held -
Customs –Section 27 of the Customs Act, 1962 - Refund of export duty paid since goods could not be exported for want of buyer within time - Bar of limitation - Limitation starts from the date of payment of duty and not from the date of cancellation of shipping bill - Duty has been finally assessed and paid by appellant following self assessment procedure and obtained Let Export Order - Shipping bill was allowed to be cancelled more than one year thereafter as shipment was delayed –Claim that Refund of export duty was made within six months from the date of cancellation of shipping bill held inconsequential - Further, export duty paid cannot be considered as ‘deposit' to circumvent the limitation provision - Assessee appeal rejected: CESTAT
The petitioner also prays for a direction for refund of a sum of Rs.1,45,39,200/-, which according to them, has been wrongly withheld by the department.
The facts are -
On 17.11.2011, the petitioner filed a shipping bill with the Commissioner of Customs, Mundra, for export of Iron ore Fines to one M/s Synergy Resources International Group, China. On self assessment, the petitioner deposited a sum of Rs.1,45,39,200/- by way of export duty at the rate of 20% of the value of the goods on 05.12.2011. The Customs authorities thereupon issued a LET export order on 09.12.2011. It is the case of the petitioner that the export actually could not take place.
On 17.01.2013 , the petitioner wrote to the Assistant Commissioner of Customs, Mundra inter alia seeking cancellation of earlier shipping bill and allowing them to file a fresh shipping bill for payment of export duty and export thereafter.
The authorities accepted the request of the petitioner for cancellation of the shipping bill dated 17.11.2011.
The petitioner, therefore, filed fresh shipping bills dated 23.01.2013 and 19.02.2013, on which, the petitioner paid the newly assessed duty at the revised valuation of the cargo and at the rate of 30% of the valuation as per the prevailing rate of customs duty. Such goods were allowed to be exported and actually exported in due course.
On 04.05.2013 , the petitioner filed an application before the Assistant Commissioner of Customs, Mundra, for refund of the sum of Rs.1,45,39,200/- paid by way of customs duty pursuant to the original shipping bill dated 17.11.2011.
By an order dated 31.01.2014, the appliation for refund was rejected on the ground of limitation. Inasmuch as the application for refund of the duty was filed beyond a period of one year from the date of payment of duty. The petitioner carried this order before the Appellate Commissioner and having failed, before the Tribunal. Tribunal by the impugned judgment, upheld the orders passed by the Customs authorities.
And this is how the present petition came to be filed.
After considering the submissions made by both sides, the High Court extracted sections 2(18), 2(20), 26, 27 and also adverted to sections 12, 16, 50, 51 of the Customs Act, 1962 and inter alia observed -
+ What actually happened was that the petitioner applied for permission of export by filing shipping bills and depositing self assessed tax. The Customs authorities satisfied that all the requirements are fulfilled, granted permission for export as envisaged under sub-section (1) of section 51. However, the export never took place.
+ The assessment of tax, be it self assessed or assessed by the Customs authorities would be in terms of section 16 on the basis of the valuation and rate applicable at the time of entry of goods for export. The levying of tax however, would be under section 12 upon the actual export of goods. Sub-section (1) of section 51 does require that before the proper officer grants permission for export of goods, he would have to be satisfied that the exporter has paid the duty assessed on such goods and other charges payable under the Act. Naturally since the permission for export cannot be granted unless the duty is actually paid, nevertheless, the amount so deposited would be appropriated towards duty only upon exportation of the goods.
+ If the amount deposited by the petitioner is treated as a duty paid and literal interpretation of sub-section (1) of section 27 is adopted, the authorities perhaps would be right in contending that the application for refund was beyond the period of limitation prescribed (of one year). However, such interpretation would lead to anomalous and unintended consequences and must be avoided.
+ In the present case, the petitioner's right to seek refund, or in other words the cause for filing application for refund, arose only when the export actually failed . Till then, the petitioner could not have applied for return of amount already deposited. If in the meantime, as in the present case, more than a year is passed, the literal interpretation of application of sub-section (1) of section 27 would amount to a situation where the cause of action for filing refund application even though had not arisen within one year from the date of deposit of the duty, the applicant for refund would be told that his refund application is barred by limitation.
+ The issue can be looked from slightly different angle. If the petitioner's export had failed within few days of filing of shipping bill and the LET order passed by the Customs authorities, even counsel for the department agreed that the refund application, if filed promptly, would have been granted. The question immediately arises, under which provision of the Customs Act, such refund would become payable. No provision is brought to our notice which could cover the present instance for refund.
+ Section 26 itself refers to refund of duty which has been paid on the exportation of any goods. In the present case, the goods were never exported. The right of the petitioner to seek return of the amount deposited while filing the shipping bill thus stems from the fact that the anticipated export never took place.
+ If the stand of the department was that it was not possible to allow cancellation of shipping bill after a long gap of time, such a stand has not been adopted . The department, on the contrary, permitted the petitioner to cancel the shipping bill. Consequently, the LET order based on such shipping bill stood automatically cancelled. In fact, the petitioner was allowed to file fresh shipping bill, pay fresh duty and carry out export of the same goods. That the petitioner under no circumstances can be asked to pay export duty twice on single export of the same consignment.
The impugned orders were set aside.
The respondent department was directed to refund the sum of Rs.1,45,39,200/- to the petitioner with the interest.
(See 2018-TIOL-58-HC-AHM-CUS)
