2014 (12) TMI 611 - HC - Customs

Denial of refund claim - Exemption under Customs Notification No. 21/2002 - Re-export of left over items of goods had to be done before 30 April, 2004 in terms of the Essentiality Certificate issued by Director General of Hydrocarbons - Held that - The refusal to grant refund in the absence of duty being paid under protest is wholly irrelevant. This is for the reason that the refund claim has been filed within the period of six months from the date of payment of duty. Therefore, the refund claim is in time and protest is irrelevant for grant of refund. Further, the export having taken place almost 10 years also, it is almost impossible to find the original documents. It appears that after filing of the petition, the petitioner had been able to obtain from the C.H.A. a photocopies of the customs attested invoice and the customs attested packing list accompanied by Annexure-II, of the export of the left over spares and consumables exported. Annexure-II sets out the balance quantity of goods not consumed and re-exported in December, 2004. The petitioner submits that the Deputy Commissioner of Customs (Import) passed an order after following the principle of natural justice and in view of the long delay of almost 12 years from the date of import and 10 years from the date of export, the petitioner be allowed to produce the photocopies of the documents under which the left over spares and consumables were exported in December, 2004. - Matter remanded back - Decided in favour of assessee.

Issues:
1. Quashing of order rejecting refund claim without personal hearing.
2. Eligibility for exemption under Customs Notification No. 21/2002.
3. Rejection of refund claim based on re-export date.
4. Rejection of refund claim due to lack of original documents.
5. Breach of natural justice in passing the impugned order.

Issue 1: Quashing of order rejecting refund claim without personal hearing
The petitioner sought to quash the order rejecting their refund claim without a personal hearing. The High Court found that the impugned order was passed without granting a personal hearing to the petitioner, breaching the principles of natural justice. Consequently, the court exercised its extraordinary jurisdiction under Article 226 of the Constitution of India and set aside the impugned order. The Deputy Commissioner of Customs was directed to reconsider the refund application after hearing the petitioner on all issues and allowing the submission of photocopies of export invoices and packing lists.

Issue 2: Eligibility for exemption under Customs Notification No. 21/2002
The petitioner imported spares and consumables for drilling operations in India under a contract with O.N.G.C. The goods were exempt from duty under Customs Notification No. 21/2002, subject to an Essentiality Certificate. The petitioner initially paid customs duty due to the unavailability of the certificate. After obtaining the certificate through legal proceedings, the petitioner filed a refund application in April 2003. The Commissioner of Customs (Appeals) allowed the claim, stating that the petitioner fulfilled the conditions of the notification and was eligible for the refund benefit.

Issue 3: Rejection of refund claim based on re-export date
The refund claim was rejected by the Deputy Commissioner of Customs due to the re-export of goods being done after the specified date in the Essentiality Certificate. The rejection was based on the re-export date being beyond the deadline, leading to the denial of benefits under Customs Notification No. 21/2002. The High Court noted the discrepancy and directed a reevaluation of the claim with an opportunity for the petitioner to provide supporting documents.

Issue 4: Rejection of refund claim due to lack of original documents
The Deputy Commissioner rejected the refund claim citing the absence of the original or photocopy of the customs attested invoice and lack of evidence of duty payment under protest. The petitioner argued that the claim was filed within the stipulated time frame and that the long duration since import and export made obtaining original documents challenging. The High Court acknowledged the difficulty in obtaining original documents after such a long period and allowed the submission of photocopies for reevaluation.

Issue 5: Breach of natural justice in passing the impugned order
The High Court observed that the impugned order was passed without granting a personal hearing, violating the principles of natural justice. Consequently, the court set aside the order and directed the Deputy Commissioner to reconsider the refund application after providing the petitioner with a hearing and an opportunity to submit necessary documents. The court emphasized the importance of following due process and ensuring fair treatment in administrative decisions.

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