2009 (12) TMI 250 - HC - Customs

Refund-Limitation- EDD of 4% paid subject to verification. Declared value accepted as transaction value after verification. Department stating that assessment final and refund claimed after six months. Time Limit for refund application from date of adjustment of 1% EDD on final assessment. EDD collected making assessment provisional and rejection of refund on time bar not applicable. Treating assessment as final and also retaining EDD against tenor of relevant order department circular. Impugned order set aside. Department directed to finalise assessment

Summary

Issues:
Claim for refund of Extra Duty Deposit (EDD) on imports from related persons treated as final assessment.

Analysis:
The petitioner, engaged in the manufacture of Power Rectifier System, imported goods from its Parent company. The import transactions were examined under Section 14 of the Customs Act, 1962. The Special Valuation Branch (SVB) held an inquiry in accordance with Circular No. 11/01, which stated that imports between related persons should be assessed provisionally with Extra Duty Deposit (EDD) of 1%. The Assistant Commissioner of Customs, SVB, accepted the value quoted by the petitioner as transaction value and ordered all pending assessments to be finalized. However, when the petitioner sought a refund of 1% EDD paid, the respondents treated the assessment as final, leading to the petitioner filing a writ petition seeking to treat the bills as provisionally assessed since they had paid 1% EDD.

The petitioner argued that the EDD collected was only for provisional assessment, as per Circular No. 26 SVB, and should be refunded upon issuance of SVB assessment order. The respondents contended that since the bills of entries were finally assessed, any claim for refund should have been made within the prescribed time frame under the Customs Act. They emphasized that the petitioner had not filed a claim for refund within the stipulated period, making the refund claim unsustainable under the law.

The Court examined the circulars issued by the respondents and noted that the assessment should have been finalized within four months from the date of reply obtained from the importer. The order passed on 6-6-2008 directed all pending assessments to be finalized, accepting the value declared by the importer. The Court found that the collection of 1% EDD was unjustified as it contradicted the order dated 6-6-2008, which indicated a provisional assessment. Therefore, the Court directed the respondents to finalize the assessment in accordance with the order passed on 6-6-2008 within six weeks, allowing the petitioner to seek remedies as per law.

In conclusion, the Court set aside the order treating the assessment as final and upheld the petitioner's claim for refund of the EDD paid, emphasizing the need for compliance with the provisions of the Customs Act regarding refund claims and provisional assessments.