2016 (9) TMI 831 - HC - Customs

Enforcement of Bond and Bank Guarantee - Denial of refund claim - milled rice - broken rice - export - local sales - EPCG scheme - Notification No.55/2003, dated 01.04.2003 - import of two series colour sorter and two feed chutes with essential spare parts from abroad at concessional duty of 5% - discharge of export obligation - whether the petitioner has to be directed to approach the Assistant Commissioner (Refunds) or a direction to be issued to the first respondent who has cancelled the bank guarantee of the petitioner - Held that - the case of Commissioner of Customs, Chennai Vs. M/s.Aristo Spinners Pvt. Ltd. 2008 (1) TMI 160 - HIGH COURT MADRAS relied upon. The petitioner need not be called upon to approach the Assistant Commissioner (Refunds) and the first respondent himself can consider the petitioner s claim as the first respondent has cancelled the bond and bank guarantee on the petitioner producing the Export Obligation Discharge Certificate. The petitioner to submit a representation along with a copy of this order - after taking note of the legal position and also the factual position, refund to be effected within a reasonable time, not later than eight weeks from the date of the receipt of the representation - petition disposed off - decided in favor of petitioner.

Summary

Issues:
1. Direction sought for refund of encashed amount by petitioner.
2. Interpretation of whether petitioner should approach Assistant Commissioner (Refunds) or first respondent for refund.

Analysis:
1. The petitioner, engaged in rice production and export, sought a direction for the refund of an encashed amount of ?6,45,945. The petitioner imported machinery under the EPCG scheme and executed a bond and bank guarantee for the duty difference. Failure to meet export obligations led to encashment of the bank guarantee. Upon submission of the export obligation discharge certificate, the first respondent cancelled the bond and bank guarantee. The petitioner filed a Writ Petition seeking the return of the encashed amount.

2. The respondents did not dispute the facts but suggested that if the petitioner had approached the Assistant Commissioner (Refunds), the refund would have been considered. The key question was whether the petitioner should approach the Assistant Commissioner (Refunds) or if a direction should be issued to the first respondent for the refund.

3. The Court cited precedents to establish that furnishing a bank guarantee does not equate to payment of duty to revenue. Refund of bank guarantee does not amount to tax collection. Referring to previous cases, the Court concluded that the petitioner need not approach the Assistant Commissioner (Refunds) as the first respondent, having cancelled the bond and bank guarantee upon submission of the discharge certificate, can consider the claim directly.

4. Consequently, the Court disposed of the Writ Petition by directing the petitioner to submit a representation to the third respondent along with a copy of the order. The third respondent was instructed to consider the legal and factual positions and effect the refund within eight weeks from receiving the representation. No costs were awarded in this matter.