2015 (11) TMI 884 - AT - Customs

Denial of refund claim - SEZ unit - claim of refund due to reduction of Basic Customs duty (BCD) from 5% to 2.5% vide Notification No. 54/2010-Cus. dated 29.04.2010 - whether the Customs Officer posted in the Special Economic Zone unit has the power to sanction refund of customs duty or not. - Held that - issue is no more res-integra in view of the decision of the Hon ble High Court of Gujarat. In the case of Anita Exports vs. UOI (2014 (12) TMI 361 - GUJARAT HIGH COURT), the issue involved was examined by the Hon ble High Court - impugned orders of the lower authorities can not be sustained. The refund applications filed by the appellant have to be examined by the Customs Officer under the provisions of Customs Act and have to be disposed of on merits in accordance with the law. Therefore, these matters are required to be remanded to the proper officer of Customs at the SEZ for examining the refund claims filed by the appellant and take action as per law - Decided in favour of assessee.

Summary

Issues involved:
Jurisdiction of Customs Officer in Special Economic Zone (SEZ) to sanction refund of customs duty.

Analysis:

1. Issue of Jurisdiction:
The appeal involved two separate orders of the Commissioner (Appeals) on the issue of whether the Customs Officer in the SEZ unit has the authority to sanction the refund of customs duty. The appellant, situated in Surat Special Economic Zone, filed refund claims due to a reduction in Basic Customs duty and SAD under specific notifications. The Specified Officer of Customs rejected both refund claims, leading to the appeal. The appellant argued that Customs Act provisions make them eligible for refunds, citing relevant legal precedents. On the contrary, the Revenue's representative contended that there are no provisions for Customs duty refunds by the proper officer in the SEZ Act, making it illegal for them to sanction such refunds without examining other factors like assessment challenges and unjust enrichment.

2. Legal Precedents and Decision:
The Tribunal referenced the decision of the Hon'ble High Court of Gujarat in the case of Anita Exports vs. UOI, which highlighted the confusion regarding the competent authority to process refund claims from SEZ units. The Court emphasized that statutory changes were necessary to shift the mechanism for SEZ units' refund claims from Customs authorities to SEZ authorities. It declared the Ministry of Finance's directives invalid and reiterated the Customs Commissionerate's authority to entertain refund claims for SEZ units until proper mechanisms were established under SEZ laws. The Court clarified that issues related to excess payments of customs duty fall under the purview of the Customs Act and should be decided by the authority under the Act.

3. Tribunal's Decision and Directions:
The Tribunal concluded that the lower authorities' orders were unsustainable in light of the legal position clarified by the High Court. It directed the remand of the matters to the proper officer of Customs at the SEZ for examination and disposal of the refund claims in accordance with the law, ensuring the appellant's right to be heard. Additionally, considering the delay in proceedings, the Tribunal instructed the proper officer to dispose of the matters within three months from the date of the order.

4. Final Judgment:
Both appeals were allowed by remanding them to the proper officer of Customs in the SEZ at Surat with specific directions for examination and expeditious disposal. The Tribunal emphasized the need for adherence to the Customs Act provisions and timely resolution of the refund claims to provide justice to the appellant.

This detailed analysis of the judgment highlights the legal complexities surrounding the jurisdiction of Customs officers in SEZs to sanction customs duty refunds and the importance of following established legal procedures and precedents in such matters.