2011 (10) TMI 447 - HC - Customs

Application for refund - - authority to pass an order - The grievance of the Petitioners in these proceedings is that an application for refund in the amount of Rs. 1.02 crores, which was due under an order passed by CESTAT dated 29 August 2006 has not been granted despite several requests and the passage of years. - Held that - We find no reason or justification for the Revenue to contend that the application for refund should be pursued with the Air Cargo Complex at New Delhi. The deposit having been made in Mumbai, the order of adjudication having been passed in Mumbai, and the order of appropriation having been issued by the adjudicating authority in Mumbai, the Customs authorities at Mumbai had sufficient jurisdiction to entertain the claim for refund. In that view of the matter, we quash and set aside the directions contained in the communication dated 15 November 2010 of the Central Board of Excise and Customs, directing that the refund claim be decided by the Commissioner of Customs (Export), ACC, Delhi. We direct that the refund claim shall be heard and disposed of by the Competent Authority under the jurisdiction of the Commissioner of Customs, Air Cargo Complex, Mumbai. Upon the passing of the requisite order, the amount, if any, there found to be due and payable to the Petitioners shall be refunded within a period of one month from the date of the passing of the order.

Summary

Issues:
1. Delay in refund application processing.
2. Jurisdiction for deciding the refund claim.
3. Appropriation of deposit against duty liabilities.
4. Compliance with Circular on refund timelines.

Issue 1: Delay in refund application processing:
The Petitioners filed an application for refund of Rs. 1.02 crores, due under a CESTAT order, in January 2007. Despite multiple reminders and submissions of relevant documents, the refund was not processed. The Court found no valid reason for the delay, especially since the facts were undisputed. The CESTAT had allowed the Petitioners' appeal against the adjudication order, and the Supreme Court had dismissed the Department's appeal. The Court noted that the Department had a duty to refund the amount promptly, as per a Circular mandating refunds within three months of the final authority's order, unless stayed by a Superior Court.

Issue 2: Jurisdiction for deciding the refund claim:
The Customs authorities contended that the refund claim should be pursued with the Air Cargo Complex in New Delhi. However, the Court disagreed, stating that since the deposit was made in Mumbai, the adjudication order was issued in Mumbai, and the appropriation decision was made by the adjudicating authority in Mumbai, the Customs authorities in Mumbai had the jurisdiction to handle the refund claim. The Court quashed the direction from the Central Board of Excise and Customs to decide the claim in Delhi and directed that the refund application be heard and decided by the Competent Authority under the jurisdiction of the Commissioner of Customs, Air Cargo Complex, Mumbai.

Issue 3: Appropriation of deposit against duty liabilities:
The Department had appropriated the deposit against duty liabilities at the Air Cargo Complex in New Delhi and CWC, Okhla. Despite the Petitioners' assertion that the amount was handed over to the Department in Mumbai and the adjudication order was passed in Mumbai, the Department insisted that the refund jurisdiction did not lie with the Mumbai authorities. The Court found that the appropriation was done based on the adjudication order issued in Mumbai, and there was no justification for withholding the refund when the facts were clear.

Issue 4: Compliance with Circular on refund timelines:
The Court highlighted a Circular from the Central Board of Excise and Customs mandating refunds within three months unless stayed by a Superior Court. In this case, as there was no stay from a Superior Court and the Department's appeal was dismissed by the Supreme Court, the Court found that the refund should have been processed promptly. The Court directed the Competent Authority in Mumbai to decide on the refund claim within six weeks and ensure the amount, if due, is refunded within one month from the date of the order.

In conclusion, the High Court of Bombay found in favor of the Petitioners, emphasizing the need for timely processing of refund applications, the importance of jurisdiction in deciding refund claims, and the obligation of the Department to adhere to Circulars on refund timelines. The Court quashed the direction to pursue the claim in Delhi and directed the Mumbai authorities to handle the refund process promptly and efficiently.