2016 (1) TMI 958 - HC - Customs

Refund claim - SEZ unit - Additional Commissioner, Customs, Surat returned the refund application of the petitioner on the ground that he has no authority to decide the same. - In the process of removal of its drugs, the petitioner had paid customs duty of ₹ 25,18,342/ as applicable. However, owing to delay in supply of drugs, order was cancelled by the DTA buyer. On account of such development, the petitioner filed a request before the SEZ authority for cancellation of bill of entry as goods were not removed out of SEZ. Resultantly, according to the petitioner such custom duty of ₹ 25,18,342/became refundable. Held that - the competent authority under the Customs Commissionerate, Surat, is directed to decide the refund application upon being represented by the petitioner. If so done latest by 30.1.2016, decision will be taken expeditiously and preferably before 30.4.2016.

Issues Involved:
1. Authority to decide refund claims for SEZ units.
2. Legal validity of the Ministry of Finance's directive dated 1.11.2012.
3. Applicability of Section 27 of the Customs Act, 1962 for refund claims.
4. Jurisdiction of Customs Commissionerate in refund claims.

Detailed Analysis:

1. Authority to Decide Refund Claims for SEZ Units:
The petitioner, a SEZ unit engaged in manufacturing pharmaceutical drugs, challenged a communication dated 23.7.2015 from the Additional Commissioner, Customs, Surat, which returned the refund application on the ground of lack of authority to decide the same. The petitioner had paid customs duty of Rs. 25,18,342, which became refundable due to the cancellation of the order by the DTA buyer. The core issue was whether the Customs authorities had the jurisdiction to entertain and decide refund claims for SEZ units.

2. Legal Validity of the Ministry of Finance's Directive Dated 1.11.2012:
The court referred to a previous decision in the case of Anita Exports Vs. Union of India, where it was held that the Ministry of Finance's directive dated 1.11.2012, which suggested that SEZ authorities should handle refund claims, was invalid. The court observed that the Ministry of Finance could not, by a mere communication, suspend the statutory powers of the Commissioner of Customs to process refund claims. The directive was deemed thoroughly incorrect as it failed to provide a statutory mechanism under the SEZ laws for handling such claims.

3. Applicability of Section 27 of the Customs Act, 1962 for Refund Claims:
The court emphasized that Section 27 of the Customs Act, 1962, which pertains to claims for refund of duty, was applicable in this case. It was noted that any refund of customs duty collected by the Commissioner of Customs must be processed under this section. The court cited the Constitution Bench decision in Mafatlal Industries Ltd. v. Union of India, which held that claims for refund must be made in accordance with the provisions of the Customs Act or the Central Excise Act.

4. Jurisdiction of Customs Commissionerate in Refund Claims:
The court rejected the argument that the Customs authorities lacked jurisdiction over SEZ units for refund claims. It was clarified that unless statutory provisions were amended to shift the authority to SEZ officers, the Customs Commissionerate retained the jurisdiction to entertain and decide refund claims. The court directed the Customs authorities to process the refund application of the petitioner and similar future applications without returning them.

Conclusion:
The court quashed the impugned communication dated 23.7.2015 and directed the competent authority under the Customs Commissionerate, Surat, to decide the refund application expeditiously. The court reiterated that the Ministry of Finance's directive dated 1.11.2012 was invalid and that refund claims must be processed under Section 27 of the Customs Act, 1962, by the Customs authorities. The petition was disposed of with directions to ensure timely processing of refund claims.

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