2018 (6) TMI 1497 - HC - Customs

SEZ Unit - Refund claim - duty paid under protest - the question of refund of duty remained suspended because of inter-departmental disputes though the petitioner had succeeded before the High Court and the SLP was also dismissed by the Supreme Court - Held that - Mere filing and pendency of the review petitions would not enable the Department to withhold the refund claims of the petitioner, whose writ petition was allowed in the year 2009 and SLP was dismissed in the year 2010. The Department cannot consider such belated development as automatic implementation of the declaration laid down by the High Court. It is always open for the Department to pursue its remedies, but in facts of the present case, must release the refund, if otherwise payable in law, subject to outcome of such proceedings. The petitioner s refund applications shall be decided latest by 31-12-2017 - petition disposed off.

Summary

Issues:
Request for refund of duty paid under protest caught in crossfire between two Central Government departments; Delay in receiving refund despite success before the Court in 2009.

Analysis:
The petitioner, a company engaged in manufacturing chemical products, faced a dispute with the Department regarding the payment of duty on imported steel items from the Domestic Tariff Area for their unit in the SEZ area at Dahej. The petitioner cleared the goods by paying duty under protest. The Gujarat High Court, in a judgment dated 4-11-2009, allowed the petitions challenging the Department's stand, declaring that the levy of duty on goods supplied from DTA to SEZ is not justified. The Department appealed to the Supreme Court, but the SLP was dismissed on 12-7-2010. Despite this, the petitioner had not received the refund of duty paid under protest.

The petitioner approached the Department for the refund, but inter-departmental disputes led to the suspension of the refund process. The Additional Commissioner of Central Excise & Customs, Surat, directed the Deputy Commissioner, SEZ, Dahej, to refund the duty to the petitioner. However, due to disagreements between the departments, the refund remained pending. The petitioner filed a petition seeking the refund.

In response to the petition, both the Customs authorities and SEZ authorities appeared. The Customs authorities agreed to process the petitioner's refund applications according to the law. On the other hand, the SEZ authorities mentioned that review petitions were filed before the Supreme Court against the dismissal of the SLP, which were pending.

The Court held that the mere filing and pendency of review petitions did not entitle the Department to withhold the refund claims of the petitioner, whose writ petition was allowed in 2009, and the SLP was dismissed in 2010. The Court directed that the petitioner's refund applications should be decided by 31-12-2017, emphasizing that the Department must release the refund, if otherwise payable in law, regardless of the pending review petitions. The petition was disposed of accordingly.