TMI Blog2018 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Entry are fulfilled. The orders passed by the jurisdictional customs officer, appellate authority and the Tribunal have attained finality. As a sequitor, it follows that SAD refundable was a duty paid by the petitioner under the Customs Act in respect of which exemption vide N/N. 107/2007-Cus dated 14th September,2007 has been granted by the Central Government. Section 27A states that duty directed to be refunded under sub section 2 to Section 27, if not paid within three months from date of receipt of application under sub section 1 to section 27, interest would be paid by the authorities as per the rate specified. In other words, if the refund is paid within three months of date of receipt of application under sub section 1 to Section 27, no interest is payable. Interest is payable on delayed refunds after three months post the application for refund till the date of refund. Section 27A therefore ensures prompt decision and payment of refunds, when due and payable under sub section 2 of Section 27 of the Act. Interest would be payable in terms of Section 27A of the Customs Act on refund of SAD payable in terms of N/N. 102/2007. Petition allowed. - W.P.(C) 9178/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, granting refund of balance SAD of ₹ 1,45,39,667/-. The respondents had preferred an appeal, but did not succeed vide order of the Tribunal dated 11th November, 2016. 7. The question, which arises for consideration relates to payment of interest on late refund of SAD in terms of Section 27A of the Customs Act. The contention of the respondents is that Section 27A is not applicable to refunds of SAD as Notification No.102/2007-Cus. dated 14th September, 2007, has been issued under sub-section (1) to Section 25 of the Customs Act and not under Section 27A of the Customs Act. The respondents in support rely on Circular No.6/2008-Cus. dated 28th April, 2008, which in paragraph 4.3 states that interest under Section 27A would not be payable on refund of SAD. The petitioner has accordingly challenged paragraph 4.3 of the said circular. 8. Sections 25, 27 and 27A of the Customs Act, reads :- 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nental shelf of India or exclusive economic zone of India as referred to in Section 6 and Section 7, respectively, of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 (80 of 1976), and imported prior to the 7th day of February, 2002 shall be deemed to be and shall always be deemed to have been exempted from the whole of the duties of customs leviable on such mineral oils and accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, no suit or other proceedings in respect of such mineral oils shall be maintained or continued in any court, tribunal or other authority. (8) Notwithstanding the exemption provided under sub-section (7), no refund of duties of customs paid in respect of the mineral oils specified therein shall be made.] XXX XXX XXX 27. Claim for refund of duty (1 ) Any person claiming refund of any duty or interest,- (a) paid by him (b) borne by him,- may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to (a) the [duty and interest, if any, paid on such duty], paid by the importer [or the exporter, as the case may be], if he had not passed on the incidence of such 1[duty and interest, if any, paid on such duty] to any other person; (b) the [duty and interest, if any, paid on such duty], on imports made by an individual for his personal use; (c) the [duty and interest, if any, paid on such duty] borne by the buyer, if he had not passed on the incidence of such [duty and interest, if any, paid on such duty], to any other person; (d) the export duty as specified in section 26; (e) drawback of duty payable under sections 74 and 75; (f) the [duty and interest, if any, paid on such duty] borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify: Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of [duty and interest, if any, paid on such dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 levied under subsection (5) of section 3 of the Customs 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; (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 alongwith the refund claim: (i) document evidencing payment of the said additional duty; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rects that the field formations shall ensure disposal of all such refund claims under the said notification within the normal period not exceeding three months from the date of receipt. 10. Section 25 of the Customs Act empowers the central government, who may by notification in the official gazette, grant exemption generally, either absolutely or subject to conditions which may be specified from whole or any part of duty of customs leviable thereon. The conditions to be fulfilled can be before or after clearance of goods. Sub section 3 widens the manner and scope in which exemption can be granted to include form or method different from the form or method in which the statutory duty is leviable. The explanation defines the term 'form or method' in relation to a rate of duty of customs. 11. Notification No.102/2007-Cus. has been issued in exercise of power conferred by Section 25 of the Customs Act. As noticed above, it exempts goods falling within the First Schedule of the Customs Tariff Act, 1975, from the whole of SAD leviable under sub-section (5) of Section 3 of the Customs Act, when imported into India for subsequent sale, subject to the conditions in paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, and refunds under sub section 2 to Section 27 A of the Customs Act when delayed beyond 3 months from date of application, interest would be payable in terms of and as per Section 27 of the Customs Act. 16. Referring to notification no. 102/2007-Cus, the Division Bench in Riso India Pvt. Ltd. (supra) observed that the clauses had the effect of extending the period of limitation for refund, to the extent that the said period is not stipulated in Section 27 of the Customs Act. In Riso India Pvt. Ltd. (supra) it was held - 20. In the context of the present case, Sections 27 and 27A of the Act form a statutory scheme for grant of refunds. Section 27A unambiguously states that where there is a delay in making the refund, interest would be payable on the amount of refund, in the manner stipulated under Section 27A of the Act. A collective reading of Section 3(8) of the CTA and Sections 27 and 27A of the Act leads to the conclusion that the provisions in the Act concerning refunds and interest on delayed refunds, would equally apply to refund of SAD leviable under Section 3 of the CTA. Circular No.6/2008 to the extent that it seeks to deny a successful applicant for refund o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in dispute. However, no order has been passed so far and the Court has already directed the respondents to process the refund application. In such a situation, the present circular has been challenged. On going through paragraph 4.3 of the circular, it is evident that the Board is of the view that there is no specific provision for payment of interest in the Notification No.102/2007-Customs, dated 14.9.2007. That reason is not correct as the grant of exemption under Section 25(1) of the Customs Act, 1962 is one facet. The claim for refund is contingent on complying with the requirement as specified in the notification. The exemption from payment of special additional duty as payable under Section 3(5) of the Customs Tariff Act, 1975 is exempted under Section 25(1) of the Customs Act, 1962. Therefore, the refund of duty paid will have to be read in terms of Section 3(8) of the Customs Tariff Act, 1975 and not otherwise. Therefore, the provision that is applicable for refund is Section 27 of the Customs Act, 1962. If the refund is not made as specified, then the consequences will follow with regard to interest. 11. Furthermore, the grant of exemption under Section 25(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest. Accordingly, it is held that interest would be payable in terms of Section 27A of the Customs Act on refund of SAD payable in terms of Notification No. 102/2007. 22. We may also deal with the objection raised by the respondents that the impugned order is appealable. Contention of the petitioner in this regard is two-fold. Firstly, the issue is covered by the decision in Riso India Pvt. Ltd. (supra) and, therefore, filing of appeal is not required and is a formality. Secondly, it is submitted that the authorities in spite of the decision of Delhi High Court in Riso India Pvt. Ltd. and of Madras High Court in KSJ Metal Impex (P) Ltd. have followed the circular. In these circumstances, the petitioner has challenged the validity of this circular itself as being contrary to the legislative intent and Section 27A of the Customs Act. This challenge cannot be made before the Customs' authorities. We find merit in the contentions raised by the petitioner to meet the challenge predicated on the plea of alternative remedy, in view of the factual matrix of the present case and challenge to the circular. 23. Resultantly, the writ petition is allowed and the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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