2021 (2) TMI 567 - HC - Customs

Refund of special additional duty of customs - Delay due to confusion in Jurisdiction - sale of imported materials into the domestic tariff area by the unit of petitioner company in the Surat Special Economic Zone - HELD THAT - It is quite apparent from the material, which has been produced that it is not the merit which is being questioned by the authority as the claim is of the refund of special additional duty of customs in respect of goods imported through 6 bills of entries by preferring refund application before the Specified Officer of the Surat Special Economic Zone. We notice that the Order in Original denied it on the ground that there were no provisions in the Special Economic Zone Act, 2005 and the Special Economic Zone Rules, 2006. Attempt was made by the petitioner to prefer an appeal so that in a pending appeal before CESTAT, it can throw some light. However, this was decided in absence of the petitioner. Thereafter also, it made all possible attempts to once again reiterate its request for refund on 1.11.2018 and that too, has not been responded. Attention is drawn to the Circular No.11/2017-Cus. dated 31.3.2017 of Government of India, Ministry of Finance, regarding the amendment in Special Economic Zone Rules, 2006 in Rule 47, which clarifies that representations have been received from field formations requesting clarification regarding amendments made in the Special Economic Zone Rules, 2006 by way of inserting a new Rule 47(5) brought vide Department of Commerce (DoC) Notification No. GSR 772(E) dated 5.8.2016, wherein the functional operations like Refund, Demand, Adjudication, Review and Appeal are directed to be made by jurisdictional Customs and Central Excise authorities in accordance with the relevant provisions contained in the Customs Act, 1962 Central Excise Act, 1944 and the Finance Act, 1994. Certain doubts raised regarding operationalization of these functions, appropriate authority and time limitation in respect of these functional operations, especially refund claims filed prior to the date of coming into effect of the said notification, i.e. 5.8.2016 it clarified the same. Since it was asked as to who would be the appropriate authority it names, the Development Commissioner or the jurisdictional Customs Authority to raise the demand of duty, if need arises, in respect of unutilized capital goods by a unit in case it exits. From March 31, 2017 even this issue as to who could adjudicate in the matter of refund, also had been unequivocally clarified without any semblance of doubt. There was no earthly reason as to why thereafter also, when the request was made in the year 2018, the same has not been considered by the authority concerned, when the officer had been provided with the legal backing they needed for discharging their statutory obligations. It is unfathomable as to why the litigant be tossed from one office to another and wait for their legitimate dues only because, there was initial uncertainty in the minds of officers. The respondents are directed to decide refund claim of the petitioner without any further delay within six weeks of receipt of copy of this order and the same shall be once decided, paid with interest. It shall also regard disbursement by electronic mode through NEFT - petition allowed.

Summary

Issues Involved:
1. Refund of special additional duty of customs
2. Jurisdiction and authority to adjudicate refund claims
3. Delay and inaction by authorities
4. Interest on delayed refund
5. Responsibility and accountability of officers

Detailed Analysis:

1. Refund of Special Additional Duty of Customs:
The petitioner-company sought a refund of the special additional duty of customs paid on the sale of imported materials into the domestic tariff area by their unit in the Surat Special Economic Zone (SEZ). The refund claim was initially rejected by the Specified Officer of the Surat SEZ on the grounds that the Special Economic Zone Act, 2005, and the Special Economic Zone Rules, 2006, did not provide for such refunds.

2. Jurisdiction and Authority to Adjudicate Refund Claims:
The appeal against the initial rejection was taken to the Appellate Commissioner of Central Excise, Surat-I, who annulled the Order in Original, stating that the Specified Officer should have referred the matter to the Development Commissioner or the Board of Approval or the Central Government under Section 56 of the Special Economic Zone Act, 2005. The CESTAT later clarified that the jurisdictional Central Excise and Customs authorities were empowered to handle refund cases following an amendment to the Special Economic Zone Rules on 5.8.2016.

3. Delay and Inaction by Authorities:
Despite the CESTAT's decision in 2016, which remanded the matter to the original adjudicating authority, the petitioner faced significant delays and inaction. The petitioner repeatedly communicated with the authorities, including a letter on 1.11.2018 referencing the CESTAT order, but received no response. The court noted the lack of clarity and subsequent inaction by the authorities, which led to the petitioner being sent "from pillar to post."

4. Interest on Delayed Refund:
The petitioner requested that the refund be granted with interest for the period of delay starting three months after the filing of the refund claims until the issuance of the refund cheque. The court directed that the refund claim be decided without further delay and paid with interest, highlighting the need for promptness in such matters.

5. Responsibility and Accountability of Officers:
The court expressed concern over the apathy and carelessness of the officers in handling the refund claim. Despite the legal backing provided by the CESTAT decision and the 2017 circular, the authorities failed to act promptly. The court deemed it appropriate to identify and hold the erring officers accountable for the delay. However, considering the earnest request of the learned Standing Counsel, the court refrained from imposing costs but directed stringent actions against officers shirking their responsibilities.

Conclusion:
The petition was allowed, and the respondents were directed to decide the refund claim within six weeks of receiving the court's order and to pay the refund with interest. The court emphasized the need for promptness and accountability in handling such issues and directed the officer at the helm to take stringent actions against erring officers in the future.