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2016 (2) TMI 247 - DELHI HIGH COURT

2016 (2) TMI 247 - DELHI HIGH COURT - 2016 (334) E.L.T. 624 - Refund of SAD - SAD had been paid, not in cash, but by utilising the DEPB scrip - scope of circular - whether ultra virus to the notification - whether, in the garb of circular issued by the Central Board of Excise and Customs (‘CBEC’) New Delhi, the benefit granted under a notification issued in terms of Section 25(1) of the Customs Act, 1962 (‘Act’) can be modified or amended. - Notification No. 102/2007 - what the circular stated w .....

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(‘EDI’) system. - Held that:- Although it is sought to be projected that the circulars which are subject matter of the challenge in the present petitions were issued to streamline the procedure and to remove ambiguities, in fact what the circulars seek to amend is Notification No. 102/2007-Customs itself by introducing an additional condition for being entitled to refund, which condition does not find place in Notification No. 102/2007-Customs. - Circular Nos. 6/2008, 10/2012 and 18/20 .....

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. 102/2007-Customs, they are ultra vires of the Act and cannot be legally sustained. - refund to be allowed - Decided in favor of assessee. - W.P.(C) 4665/2014 & CM No.9309/2014, W.P.(C) 4666/2014 & CM No. 9311/2014, W.P.(C) 4667/2014 & CM No. 9313/2014 & W.P.(C) 4970/2014 & CM No. 9940/2014 - Dated:- 1-2-2016 - S.MURALIDHAR AND VIBHU BAKHRU, JJ For the Petitioner : Mr. Puneet Agarwal, Mr.Deepak Anand and Mr. Sahil Kahol, Advocates. For the Respondent : Mr. Jasmeet Singh, CGSC with Ms.Astha Shar .....

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s that under the Notification No. 102/2007-Customs dated 14th September 2007 issued in exercise of the powers of the Central Government under Section 25 (1) of the Act, the additional duty of customs, known as Special Additional Duty ( SAD ), under Section 3(5) of the Customs Tariff Act, 1975 was exempted if the goods imported were meant for subsequent sale. If the SAD was already paid, the notification allowed exemption by way of refund. Para 2 of the notification specified the following condit .....

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ustoms Tariff Act, 1975 shall be admissible; (c) the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of the said additional duty of customs. (d) the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be; (e) the importer shall, inter alia, provide copies of the following documents along with th .....

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are fulfilled. 4. The importers were paying duties of customs including the SAD by using the duty entitlement pass book ( DEPB ) scrip. However, it appears that the Department was not processing the said applications for refund of SAD in terms of the above Notification No. 102/2007-Customs on the ground that the SAD had been paid, not in cash, but by utilising the DEPB scrip. The importers then made various representations. The Customs officials also sought clarification from CBEC on whether the .....

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uty of Customs has been notified through an exemption notification, and hence, the conditions as prescribed only in the said notification will apply. All refund applications under the aforesaid notification shall be received by the concerned field formations in their Centralized Refund Section, and the applicants would be given proper acknowledgement. The status of these refund claims shall also be displayed in the online database of customs duty refunds maintained by the respective Commissioner .....

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In fact, what the circular stated was that refund of the SAD, which was liable to be made upon fulfilment of the conditions of Notification No. 102/2007-Customs, would not be in cash but re-credited to the relevant DEPB scrips which were used for making payment of the SAD. However, even this proposed system of re-crediting DEPB scrip was unable to be given effect to. The Director General of Foreign Trade ( DGFT ) which issued the DEPB scrips apparently had no mechanism for re-crediting them thro .....

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e large scale pendency of refund claims, it decided that registration of the re-credited duty scrips on the basis of consolidated certificate furnished by Customs should be allowed on manual basis . It was further stated: The facility of manual filing of Bills of Entry for utilizing the amount of re-credited CVD refund for payment of duty is also allowed. This facility has been extended up to 30-12-2010 as a one-time measure with a view to liquidate all such pendencies by that time . 7. Para 8 o .....

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ips. Further, the Board is of the view that in the interest of ensuring expeditious grant of refund of 4% CVD in cash, the importers may be advised to make the initial payment of 4% CVD in cash. 8. The time limit for utilizing the re-credited DEPB scrips was extended by issuing further circulars. On 29th March 2012, Circular No. 10/2012-Customs was issued stating that no re-crediting of DEPB scrips would be done if the payment of CVD was done by using the DEPB scrip. While reiterating para 8 of .....

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the re-credited DEPB scrips in case of 4% SAD up to 30th September 2013. 10. As far as the Petitioner is concerned, it filed four refund applications on 8th October 2013, 22nd November 2013, 16th December 2013 and 21st December 2014. Each of the above refund applications was rejected by referring to both the Circulars No. 6/2008 and 18/2013 on the ground that payments were not made in cash, but by using the DEPB scrips, and therefore, the question of refund of SAD in cash did not arise. 11. This .....

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was made in cash, refund was allowed by the said orders. 12. In paras 4, 8 and 9 of the order dated 16th May 2014 rejecting the Petitioner s refund claims submitted on 22nd November 2013 it is noted that the Petitioner has satisfied all the conditions of Notification No. 102/2007-Customs. However, in the counter affidavit filed by the Respondent, it is stated in para 1 of the preliminary submissions that the order-in-original only refers to fulfilment of conditions (a), (b),(d) &(e) of Notif .....

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put on notice that in order to seek refund they would have to make payment of the SAD only in cash and not by way of DEPB scrips, the Petitioner s applications for refund of SAD, to the extent it was not paid in cash, was rightly rejected. Reliance is placed on the very circulars which have been challenged by the Petitioner as ultra vires of the Act. It is in the above context the question arises whether the above circulars could have been issued restricting the entitlement of the importers and .....

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efund could be claimed. He further stated that the above circulars were issued to remove the ambiguities and to streamline the procedures. 15. At the outset, the Court notes that Section 151A of the Act is for a very limited purpose of issuing of instructions to officers of customs for the purpose of uniformity in the classification of goods or with respect to the levy of duty thereon or for the implementation of any other provisions of this Act or of any other law for the time being in force, i .....

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tification No.93/2008-Customs, dated 1st August 2008 under Section 25(1) of the Act to bring about an amendment to Notification No. 102/2007-Customs to introduce a time limit within which claims for refund of the SAD should be made by importers. 16. Although it is sought to be projected that the circulars which are subject matter of the challenge in the present petitions were issued to streamline the procedure and to remove ambiguities, in fact what the circulars seek to amend is Notification No .....

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uestion whether the device of circulars could be adopted for modifying a notification has come up for consideration before the Court earlier. In Sandur Micro Circuits Ltd. v. Commissioner of Central Excise, 2008 (8) TMI 3-SC, it was inter alia held that: A Circular cannot take away the effect of Notifications statutorily issued. In fact in certain cases it has been held that the Circular cannot whittle down the Exemption Notification and restrict the scope of the Exemption Notification or hit it .....

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of the selling price of the goods, then the Government notification granting the exemption should itself say so. For instance, notification GSR 1089, dated 29th April, 1969 expressly stated that the benefit of the exemption was to be available only to those manufacturers who produce proof to the satisfaction of the Collector that such benefit has been passed on by them to whom they have sole the goods. Such a condition has to be a part of the exemption notification. For, the Notification is law .....

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ment to, by a circular, reduce the statutory time for a claim of refund stipulated under the principal enactment, i.e., the Customs Act, 1962. That would make the circular ultra vires the statute and beyond the scope of the Act, Rules etc. Circulars might depart from the strict tenure of the statutory provision and might mitigate rigours of law thereby granting administrative relief beyond terms of the relevant provisions of the statute, but the Central Government is not empowered to withdraw be .....

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