2017 (1) TMI 786 - HC - Customs

Period of limitation for filing refund claim of SAD - Notification No.102/2007 Cus - it was contended that sale of the exempted goods is thus a precondition and until that is complied, refund cannot be obtained. - the subsequent sale is the triggering point for refund and that is not within the control of the petitioners. There cannot be, therefore, a unreasonable condition to obtain refund. If such conditions as are unreasonable, unfair and unjust are allowed to control the benefit of the exemption Notification, particularly refund, to the extent such stipulation disentitles the petitioners to avail of the exemption Notification, that must be struck down. - the original exemption notification neither stipulated a time period within which the refund was to be claimed, nor it makes Section 27 of the Customs Act applicable to such claims. Held that - The power to refund is to be found in section 27 of the Customs Act, 1962, and that was always there. The amendment to the notification introducing a limitation for seeking refund apart, section 27 with its condition of a limitation period was throughout on the statute book. That is the only provision enabling granting refund of any duty is undisputed. The notification granting exemption and under consideration in the case, enables claiming a refund of duty (SAD) but the power to grant it is in the substantive law. With greatest respect, if the exemption can only be claimed within the statutory provisions and not beyond the same, such conditional exemption including the stipulation as above has not been challenged. Only one condition therein cannot be declared ultra vires because the petitioners desire to brush it aside. The petitioners have accepted the position that if this exemption Notification had not been issued in exercise of the statutory power, no exemption could have been claimed at all. In these circumstances, merely because a condition is imposed to file a refund application and which is in the nature of a time-bar or limitation, that cannot be held to be onerous, excessive and therefore ultra vires Article 14 of the Constitution. If the exemption Notification grants an exemption in the manner noted by us, then, it could have been granted only in that mode and not another. In the present case, the exemption Notification states that the importer shall file a claim for refund on the additional duty of customs paid on the imported goods before the expiry of one year from the date of payment of additional duty of customs. The exemption is granted from the 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 (1) of Section 27 at any time. Petition dismissed - decided against petitioner.

Issues Involved:
1. Applicability and validity of Notification No. 93/2008Cus dated 1-8-2008.
2. Stipulation of a one-year time limit for filing a refund claim for Special Additional Duty of Customs (SAD).
3. Whether the one-year limitation period is ultra vires Article 14 of the Constitution of India.
4. Conditions for claiming exemption and refund under the Customs Tariff Act, 1975.

Issue-wise Analysis:

1. Applicability and Validity of Notification No. 93/2008Cus dated 1-8-2008:
The petitioners challenged the applicability of Notification No. 93/2008Cus, which amended Notification No. 102/2007Cus, by introducing a one-year time limit for filing a refund claim from the date of payment of SAD. The petitioners argued that the notification is ultra vires Article 14 of the Constitution of India, as it imposes an unreasonable condition that is not within their control.

2. Stipulation of a One-Year Time Limit for Filing a Refund Claim for SAD:
The petitioners contended that the one-year period stipulated for filing a refund claim from the date of payment of SAD is unreasonable and unfair. They argued that the subsequent sale of imported goods, which triggers the refund claim, is not within their control and depends on market conditions and the State Bank of India's orders. The petitioners highlighted that the purpose of SAD is to counterbalance the sales tax/value-added tax on domestically produced goods, and the refund should be based on the actual sale of imported goods.

3. Whether the One-Year Limitation Period is Ultra Vires Article 14 of the Constitution of India:
The petitioners argued that the one-year limitation period violates Article 14 of the Constitution as it is discriminatory, unfair, and arbitrary. They relied on judgments from the High Court of Delhi, which held similar stipulations as discriminatory and ultra vires. The petitioners emphasized that the law does not compel a person to perform an impossible obligation or comply with an impossible condition.

4. Conditions for Claiming Exemption and Refund under the Customs Tariff Act, 1975:
The respondents argued that the conditions for claiming exemption and refund, including the one-year limitation period, are consistent with the substantive provisions of the Customs Act, 1962. They emphasized that the power to grant refund is derived from Section 27 of the Customs Act, which imposes a limitation period for filing refund claims. The respondents contended that the exemption is conditional, and the terms and conditions must be strictly followed.

Judgment Summary:
The court held that the stipulation of a one-year period for filing a refund claim from the date of payment of SAD is valid and not ultra vires Article 14 of the Constitution. The court emphasized that the exemption from duty is conditional, and all conditions, including the limitation period, must be complied with. The court rejected the petitioners' argument that the limitation period should commence from the date of sale of goods, stating that the statutory provisions and the exemption notification must be read harmoniously. The court also noted that the power to grant exemption and refund flows from the statute, and the conditions imposed are within the Central Government's discretion.

The court disagreed with the High Court of Delhi's interpretation and held that the limitation period for filing a refund claim is not excessive, unfair, or arbitrary. The court concluded that the petitioners' writ petition lacks merit and dismissed it, upholding the validity of the one-year limitation period stipulated in Notification No. 93/2008Cus.

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