2018 (1) TMI 576 - HC - Customs

Refund claim - denial on the ground that the petitioner had not fulfilled the export obligations as required to be done in terms of the advance license granted to the petitioner dated 11. 06. 2010 - Held that - the respondents are bound to honor the redemption letter and effect the refund. The respondents cannot call upon the petitioner to prove when the bank guarantee was encashed. It is for the Department to verify their records and come to a conclusion. - the respondents are directed to refund the sum of ₹ 4,50,000/- to the petitioner within a period of eight weeks - petition allowed.

Summary

Issues:
Challenge to order rejecting refund application based on export obligations fulfillment and document submission.

Analysis:
The petitioner filed a writ petition challenging the rejection of their refund application for a sum of ?4,50,000 by the Department. The rejection was based on the petitioner's alleged failure to fulfill export obligations as required by an advance license. The Department claimed that the petitioner did not provide documents evidencing enforcement and deposit of the enforced amount. The Court expressed surprise at the rejection and allowed the writ petition, setting aside the impugned order. The Court noted that the Department should verify records to ascertain the date of encashment of the bank guarantee, rather than demanding the petitioner to prove a negative, which is legally impermissible.

The respondents filed a counter affidavit admitting that the bank guarantee was enforced on a specific date in 2014 and that the petitioner later submitted a redemption letter confirming fulfillment of export obligations. The Court held that since the redemption letter was issued subsequent to the encashment of the bank guarantee, the Department was justified in encashing it. However, the Department was now obligated to honor the redemption letter and process the refund without requiring the petitioner to prove the date of encashment. The Court emphasized that it was the Department's responsibility to verify records and make a decision based on the available information.

Given the acceptance by the respondents in the counter affidavit regarding the encashment of the bank guarantee on a specific date, the Court concluded that the petitioner had fulfilled their obligations. As a result, the writ petition was allowed, the impugned order was quashed, and the respondents were directed to refund the sum of ?4,50,000 to the petitioner within eight weeks from the date of the order.