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TMI Blog2017 (1) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... void and ultra vires Article 14 of the Constitution of India. 3. As a consequence, by a writ of mandamus, the writ petitioners seek a a direction to respondent Nos.3 and 4 to consider their refund claim independent of condition (c) of para 2 of Notification No.102/2007Cus, dated 14-9-2007, as amended by Notification No.93/2008Cus, dated 1-8-2008. 4. The petitioners, therefore, submit that the refund application be directed to be taken on file and proceeded in accordance with law. This writ petition has been filed on 15-12-2015 in this Court. 5. Since we have heard both sides in great detail at the stage of admission, we grant rule. The respondents waive service. By consent, rule is made returnable forthwith. 6. We have to set out a few facts to appreciate the contention of the learned counsel appearing for the petitioners. The petitioners are a Company incorporated under the Companies Act, 1956. The respondents are the authorities under the Customs Act, 1962 (for short, "the said Act"). 7. The petitioners state that they are engaged in import of Automatic Teller Machines (ATMs). They are clearing the same for installation to State Bank of India, as per the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re installed thereafter. It is in these circumstances that post-import the further events are not within the control of the present petitioners. 9. The petitioners highlight in the writ petition that the intention of such duties (SAD) is to counterbalance the sales tax/value added tax, etc., leviable on like goods sold in India. If such goods are produced indigenously, then, their sale has to attract all the above duties. Therefore, the exemption under Section 25(1) of the said Act from SAD is conditional upon subsequent sale. It is submitted that the petitioners are liable to pay all duties at the time of import of the goods. The petitioners, who are the importer of the goods, while issuing the invoice for sale of the goods, specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of Section 3 of the CTA shall be admissible. The petitioners have to file a claim for refund of the additional duty paid on the imported goods. However, unless and until there is an evidence of sale, the petitioners would not be able to comply with the terms and conditions of the exemption No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after, that the refund application has not been processed. This has deprived the petitioners of the benefit of the exemption Notification. 12. To the extent above, the Notification is challenged and impugned in the writ petition. 13. Mr. Patil, learned counsel appearing on behalf of the petitioners, would submit that if the refund application is to be filed within one year from the payment of SAD but the import is for subsequent sale and even exemption is on that term being satisfied, then, that period of one year cannot commence unless and until the goods are sold. Mr. Patil has taken us through the Notification dated 1492007 and its amendment vide the further Notification dated 1-8-2008. He would submit that the Central Government, on being satisfied that it is necessary in the public interest so to do, 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 Section 3(5) of Section 3 of the CTA. But the exemption Notification contains several conditions. So far as conditions 2(a) and 2(b) are concerned, there is no complaint. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption Notification by the High Court of Delhi is the only possible interpretation. 15. The interpretation is placed by invoking the doctrine that law does not compel a person to perform an impossible obligation or comply with an impossible condition. Mr. Patil has also brought to our notice the fact that a Special Leave Petition was filed by the Revenue to challenge the Judgment of the High Court of Delhi in Sony India's case (supra), but even that was dismissed. 16. It is in these circumstances that it is submitted by him that the refund application be directed to be processed. After conclusion of the hearing on the earlier occasion and before we were to commence dictation of Judgment, Mr. Patil sought to rely upon a Division Bench Judgment of this Court in the case of Weikfield Products Company (India) Pvt. Ltd. Vs. Union of India, reported in 1991 (51) E.L.T. 323 (Bom.). 17. On the other hand, Mr. Jetly, appearing for the Revenue, would submit that only two importers are seeking to impugn and question the terms and conditions in the exemption Notification. There is no vested right in matters of exemption/ relaxation and if at all there is an exemption from the payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are extremely relevant for our purpose. They read as under : "10. The Customs Act, 1962 is an Act to consolidate and amend the law relating to Customs. The object of the Act is to regulate the import and export of goods, into and from the shores of India, or otherwise, and determine the customs duty payable. It also attempts to fill the lacunae of the previous customs legislations viz. the Sea Customs Act and the Land Customs Act. It also aims to counter the difficulties that have emerged over the years due to the changing economic and financial conditions; amongst them it proposes to tackle the increasing problems of smuggling both in and out of the country. The Act aims to sternly and expeditiously deal with smuggled goods, and curb the dents on the revenue thus caused. In order to deal with the menace of smuggling, the authorities are enabled to detect, conduct search and seizure, and if necessary, confiscate such smuggled goods, within the territory of India. ... ... ... ... 16. It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place outside India but does not include goods which have been cleared for home consumption. The definition of the term "importer" in Section 2(26) is also relevant. The earlier definitions in Section 2, Clauses (23) and (25) are not relevant for our purpose. "Proper officer", in relation to any functions to be performed under this Act means the officer of customs who is assigned those functions by the Board {Section 2(34)}. The words "tariff value" are defined in Section 2(40). The word "value" is defined in Section 2, Clause 41. 19. Chapters II and III of the said Act contain provisions about the classes of officers of customs, appointment of customs ports, airports, etc.. Chapter IV enlists the prohibitions on importation and exportation of goods. Chapter IVA enables detection of illegally imported goods and prevention of the disposal thereof. Chapter IVB deals with prevention or detection of illegal export of goods. Chapter IVC contains Section 11N which confers power to exempt from the provisions of Chapters IVA and IVB. Then comes Chapter V which is titled, levy of, and exemption from, customs duties and it contains Sections 12 to 28BA. Section 12 deals with dutiable good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enaturing or mutilation of goods. Then comes Section 25 which reads thus:" 25. Power to Grant Exemption from Duty. - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from payment of duty, for reasons to be stated in such order, any goods, of strategic or secret nature, or for charitable purpose, on which duty is leviable. (2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette, at any time within one year of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral oils specified therein shall be made." A bare perusal of sub-section (1) of Section 25 would show that the power to grant exemption from the duty is to be exercised in public interest. It is to be exercised by issuing a Notification in the Official Gazette. That must clearly indicate that goods may be exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the Notification. The goods of any specified description can be exempt from the whole or any part of duty of customs leviable thereon. Then comes sub-section (2), which has been substituted by Act 32 of 2003, which enables the Central Government and on being satisfied that it is necessary for the public interest so to do, issue a special order exempting from payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable. Then comes sub-section (2A) which is inserted by Act 20 of 2002 with effect from 11-5-2002 and which enables clarifying the scope or applicability of any Notification issued under sub-section (1) or order issued under sub-section (2). sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this sub-section and the same shall be dealt with in accordance with the provisions of sub-section (2): Provided further that the limitation of one year or six months, as the case may be, shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Provided also that in the case of goods which are exempt from payment Of duty by a special order issued under sub-section (2) of section 25, the limitation of one year or six months, as the case may be, shall be computed from the date of issue of such order. Explanation I : For the purposes of this sub-section , "the date of payment of duty and interest, if any, paid on such duty", in relation to a person, other than the importer, shall be construed as "the date of purchase of goods" by such person. Explanation II : Where any duty is paid provisionally under section 18, the limitation of one year or six months, as the case may be, shall be computed from the date of adjustment of duty after the final assessment thereof. (2) If, on receipt of any such application, the Assistant Commissioner of Customs is satisfied that the whole or any part of the duty and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder. (5) For the removal of doubts, it is hereby declared that any notification issued under clause (f) of the first proviso to sub-section (2), including any such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette." The various sub-section s of Section 27 have to be read together and harmoniously with other sections of the Act so as to make a consistent whole of the enactment and the power to deal with refund application or claim for refund of any duty or interest. That the application shall be accompanied by such documents or other evidence as the applicant may furnish to establish that the amount of duty or interest in relation to which such refund is claimed was collected from, or paid by him and the incidence of such duty or interest, has not been passed on by him to any other pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the proper officer the invoice, if any, relating to the imported goods. (5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa." 21. Section 46 falls in Chapter VII, titled as "Clearance of imported goods and export goods. The importer shall make entry thereof by presenting electronically to the proper officer a bill of entry for home consumption or warehousing in the prescribed form. 22. We find, on a harmonious reading of all provisions and right up to Chapter XIV that reliance by Mr. Jetly on the same is wellplaced. It is clear from a reading of these provisions that remission, concession, relaxation and exemption are statutorily recognised and accepted concepts. In case of exemption what is to be borne in mind is that the act of import of goods and the goods themselves being subject to import duty, generally that would have to be paid unless exempted. The exemption is therefore a departure and the payment is a rule. In the case of exemption which is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that it is time barred", is valid in law. With respect we think that it is not. 9. Section 27 of the Customs Act provides for claims for refund of duty. The section has been substituted by a new section by Central Act 40 of 1991 (with effect from September 20, 1991). The amended Section 27 severely curtails the right to refund but for the purpose of this appeal, it is not necessary to refer to that aspect. Suffice it to say that sub-section s (1) and (2) of Section 27 (both before and after amendment) provide for filing an application for amendment within a period of six months of the payment of duty except in a case where it has been paid under protest. What is relevant herein is sub-section (4) of unamended Section 27 and sub-section (3) of amended Section 27. It would be sufficient if we set out the said sub-sections. Sub-section (4) of unamended Section 27 read as follows: "27(4) Save as provided in section 26, no claim for refund of any duty shall be entertained except in accordance with the provisions of this section." Sub-section (3) of amended Section 27 reads thus: "27(3) Notwithstanding anything to the contrary contained in any judgment, decr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No.102/2007Cus., dated 14-9-2007} "Exemption from special CVD to all goods imported for subsequent sale when VAT/Sales Tax Paid by importer. In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 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 (hereinafter referred to as the said additional duty). 2. The exemption contained in this notification shall be given effect if the following conditions are fulfilled: (a) the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods; (b) the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 the refund claim: (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods. 3. The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled. {Notification No.102/2007Cus., dated 1-4-92007 as amended by Notification No.93/2008Cus., dated 1-8-2008}" 24. The first notification grants exemption from Special countervailing duty to all goods imported for subsequent sale when VAT/sales tax is paid by the importer and equally the thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated at that percentage of the value of the imported article: Explanation.- In this sub-section , the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs and where such duty is leviable at different rates, the highest duty. (2) For the purpose of calculating under this section, the additional duty on any imported article, where such duty is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962, be the aggregate of- (i) the value of the imported article determined under sub-section (1) of section 14 or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962, and any sum chargeable on that arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act. 28. Therefore, though this Act enables the levy of the additional duty equal to excise duty, sales tax, etc., eventually it is an Act to consolidate and amend the law relating to customs duty. The duties which are levied have then to be specified and for effective and proper recovery. Even when there is any claim made for drawback, refund and exemption, it is the substantive law, namely, the Customs Act, 1962 which would govern the field. Else no refund can be claimed. 29. The High Court of Delhi considered a claim which was raised by the appellant before it. It was involved in the import, distribution and sale of electronic and information technology products. The appellant secured the release of imported goods on payment of customs duty, including the basic customs duty, additional customs duty. The appellant relied on the same exemption notification. The appellant imported some of the items as set out in para 3 of that Judgment and thereafter filed a refund claim. The refund claim was allowed in part. On appeal against the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a like article. Then comes the aspect of exemption in relation to which the Hon'ble High Court observes that the intent is to allow a refund of the special additional customs duty because the importer has suffered the incidence of SADC on import. That was meant to counterbalance the sales tax/VAT leviable on a like article in India. These very articles have been sold and the importer then has to bear the burden even of the sales tax/VAT on sale of these goods. 33. It is submitted that the Hon'ble High Court of Delhi has clearly opined and held that the provisions of the Customs Act on the rules and mechanism for refund are incorporated by reference in Section 3(5) of the CTA only "so far as may be" applicable. Since SADC is levied under Section 3(5) and that is refundable only on subsequent sale, then, no limitation period can possibly be imposed for advancing a refund claim. We have carefully perused the above observations and in the light of the analysis of the statutory provisions and the scheme of refund by us, with greatest respect, we are unable to agree with the High Court of Delhi on this point. The Rules and Regulations under the provisions of the Customs Act 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the bar of limitation contained therein. That is how consistent with that provision even the special exemption Notification carries the same stipulation or condition. We do not see how insistence on complying with it can be said to be imposing a unreasonable, unfair and unjust restriction. Once the nature of the right is considered, then, all the more we are unable to agree with Mr. Patil. There is no vested, much less absolute right in the petitioners to seek refund. Even a refund must be within the framework of the statute and admissible on the terms thereof. We are not inclined to agree with him that compliance with this period is calling upon the petitioner to do or perform something which is impossible. The exemption Notification does not impose any new condition as has been read into it. It grants the exemption from payment of duty conditionally. The exemption can be availed of provided the goods which are imported are subject to payment of duties which include all the duties that are referred to in both the enactment and the notification. If the import is for subsequent sale, then, that invoice must carry a stipulation that no credit for the additional duty of customs sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ought to be fulfilled within a time limit. These are matters best left to the Central Government. The Central Government having exercised the powers in terms of the statutory provisions, then, that must govern the whole field. Just as exemption flows from the power to exempt, equally the refund flows from the power to grant such refund and makes it admissible. Both powers flow from the statute, namely, the Customs Act, 1962. It is that statute and the other one which envisages levy, imposition and recovery of customs duties. It is that statute which grants an exemption therefrom but on conditions. Once the statutory scheme is understood in the proper perspective and as a whole, then, merely because the view taken by the Delhi High Court has not been interfered by the Hon'ble Supreme Court will not enable us to follow it. There, the discussion, with greatest respect, is short of all the above noticed provisions. 36. As a result of the above discussion, the writ petition fails. We also feel that the Judgment cited in the case of Weikfield Products Company (India) Pvt. Ltd., copy of which is handed over today, has no application to the facts and circumstances of the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of this additional duty. That can be availed of provided the goods are imported into India for subsequent sale. However, all the conditions envisage first payment, second a stipulation that when such goods are sold, invoice must indicate that no credit for this additional duty of customs shall be admissible. Thirdly, if at all a refund claim is to be laid, it must be filed within one year from the date of payment. Only in these circumstances and if the goods are sold, the payment of tax as required has to be evidenced as also to its proof produced would not mean that we can override other conditions. Pertinently, it is not regarding all the conditions but only with regard to the limitation that this argument of Mr. Patil is canvassed. Even when the Notification was first issued on 14-9-2007 there may not have been a stipulation with regard to the period for refund, but the clause was that the refund claim shall be filed within the Jurisdictional Customs Officer. The power to consider that refund claim and grant it, if permissible, is traceable to Section 27 of the Customs Act, 1962. Therefore, it was impossible to ignore the statutory bar and contained in sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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