2016 (11) TMI 677 - AT - Customs

Refund claim u/s 3 (5) of Customs Tariff Act 1975 - N/N. 102/2007-CUS dated 14/09/2007 - time bar - The Original Authority held that in respect of claim for 32, 32, 875/- duty was paid between 04/4/2008 to 17/05/08 and the claim was filed on 23/09/2009; it is after expiry of one year. Similarly a refund of 5, 75, 336/- covered duty paid in July 2008 is hit by time bar. As such a total refund of 38, 08, 211/- was rejected on the ground of time bar. - Held that - Reliance placed on the decision of the case Pioneer India Electronics (P) Ltd. Versus Union of India & Another 2013 (9) TMI 705 - DELHI HIGH COURT where it was held that the right of claim refund only accrues to the importer once sale is complete. To uphold a limitation period starting from the date of payment of duty as prescribed in the amending notification would amount to allowing commencing of limitation period for refund claim before the right of refund even accrued. The Hon ble High Court held that imposition of a period of limitation for the first time without statutory amendment through a notification therefore could not prevail. Accordingly the Hon ble High Court read down the amending notification to the extent that it imposed limitation period. Considering the above legal position settled by the Hon ble Delhi High Court the refund claims of the appellant are to be allowed.

Summary

Issues:
Refund claims for additional duty of customs rejected as time-barred under Notification No. 102/2007-CUS - Interpretation of time limit for filing refund claims - Applicability of Board Circular dated 29/07/10 - Conflict in practices among customs formations - Legal position on limitation period for refund claims.

Analysis:
The appellants filed two refund claims for additional duty of customs paid under Section 3 (5) of Customs Tariff Act, 1975, which were admissible under Notification No. 102/2007-CUS subject to specific conditions. The time limit for filing the claim was one year from the date of duty payment. However, since the assessments were initially provisional, the refund claims were not entertained by the Department. The Commissioner (Appeals) upheld the rejection of the claims as time-barred, citing a Board Circular clarifying the one-year limit from the duty payment date.

The appellant argued that different customs formations had varied practices, with some considering refund claims post-finalization of provisional assessments. They contended that their claims were delayed due to this practice and should not be denied legitimate refunds. The Authorized Representative emphasized the strict time period specified in the notification and circular, barring claims filed after one year from the duty payment date.

The Tribunal reviewed the case, noting duty payments and refund claims made after the one-year limit, resulting in a total refund rejection of over &8377;38 lakhs. Referring to a Delhi High Court decision in a similar matter, the Tribunal harmoniously construed the notification, Customs Act, and Circular, allowing refund claims within the longer of the two periods specified. Following the Delhi High Court's precedent, the Tribunal directed the Original Authority to reexamine the refund claims in line with the court's decisions, emphasizing that the right to claim a refund arises only after the completion of the sale, and any limitation period should not commence before the right to refund accrues.

In conclusion, the Tribunal allowed the appeal based on the legal position established by the Delhi High Court, directing the Original Authority to process the refund claims in accordance with the court's rulings. The decision highlighted the importance of aligning refund claim timelines with the actual accrual of the right to claim a refund, as clarified by judicial interpretations.