2021 (4) TMI 124 - AT - Customs

Refund of SAD - Failure to produce any documentary evidence in support of the claim that imported goods were of the description as mentioned in the Notification - provisions exist in the SEZ Act for grant of refund, or not - Unjust enrichment - penalty - HELD THAT - The findings of Commissioner (Appeals) are not correct as under Section 30 of the SEZ Act 2005, goods removed from SEZ to DTA are chargeable to customs duties. Hence, such excess duty paid as Customs duty can only be claimed as Refund under section 27 of Customs Act 1962. Customs authorities have inherent powers under Customs Act 1962 to process the Refunds. Accordingly, this Tribunal vide final orders dated 05- 10-2015 and 16-08-2016, has directed to process refund claims under Customs Act 1962. Provisions exist in the SEZ Act for grant of refund, or not - HELD THAT - The view that no provisions exist in SEZ Act for grant of refund is incorrect. CBIC Circular No. 11/2017-Cus dated 31-3-2017 has clarified in Para 3.3, question how old cases of refund pending as on the date of coming into effect of Notification dated 05-08-2016 will be sanctioned by Customs, Central Excise or Service Tax or CGST authorities. Inserted Rule 47(5) in SEZ Rules 2006 empowers Customs officers to issue refund claims. All field officers are bound to follow directives issued by CBIC. The authorities seems to have rejected Refund claims by O-I-O and then by O-I-A dated. 12-09-2018 for one or the other unjustified unwarranted reasons. - also, Refund claims were filed in permitted time limit of one year. This is clear from the fact that section 27 amended w.e.f. 08-04-2011 has substituted the period of Six months to One year. Unjust enrichment - HELD THAT - The incidence of ₹ 2,79,924/- and ₹ 54,733/- paid against said 10 Bill of Entry have not been recovered from any other person or customers and has been absorbed by M/s Suchi Fastners PVT Ltd. Further, Declarations submitted by DTA importer with their CA Certificates also show that they have also not recovered excess amount of duty from any other persons. These documents are adequate to pass the hurdle of unjust enrichment . Interest - HELD THAT - There is no dispute that SAD refund of ₹ 54,733/- was filed on 11-10-2010 and BCD Refund claim of ₹ 2,79,924/- was filed on 12-11-2011.It is settled law that after filling Application for Refund, if Refund is delayed by three months, claimant also becomes eligible to get interest after three months from the date of filling refund application. This is provided in section 27A of the Customs Act 1962. Accordingly, Appellant is eligible for Interest u/s 27A of Customs Act 1962 @ 6 %. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Eligibility for Basic Customs Duty (BCD) refund.
2. Eligibility for Special Additional Duty (SAD) refund.
3. Powers under the SEZ Act to grant refunds.
4. Compliance with the time limit for filing refund claims.
5. Unjust enrichment.
6. Interest on delayed refunds.

Detailed Analysis:

1. Eligibility for Basic Customs Duty (BCD) Refund:
The Appellant claimed a refund of ?2,79,924/- for excess BCD paid. The Commissioner (Appeals) rejected this claim, stating that the Appellant failed to produce documentary evidence proving the goods were as described in the notification. However, the Tribunal found that the Appellant had established through documentary evidence that the stainless steel scrap cleared from the SEZ to the DTA was for melting purposes, which qualified for a reduced duty rate of 2.5% under Notification No. 21/2002-Customs. Therefore, the excess duty paid was eligible for a refund.

2. Eligibility for Special Additional Duty (SAD) Refund:
The Appellant also sought a refund of ?54,733/- for excess SAD paid. The Commissioner (Appeals) rejected this claim, stating that SAD refunds are only eligible when goods are imported for resale. The Tribunal found that Notification No. 45/2005-Customs provided an exemption from SAD for goods produced in SEZ units and cleared to the DTA without any conditions. Hence, the Appellant was eligible for the SAD refund.

3. Powers under the SEZ Act to Grant Refunds:
The Commissioner (Appeals) held that no provisions existed in the SEZ Act for granting refunds. However, the Tribunal noted that under Section 30 of the SEZ Act 2005, goods removed from SEZ to DTA are chargeable to customs duties, and excess duty paid can be claimed as a refund under Section 27 of the Customs Act 1962. The Tribunal emphasized that Customs authorities have inherent powers to process refunds under the Customs Act 1962, as clarified by CBIC Circular No. 11/2017-Cus and the inserted Rule 47(5) in SEZ Rules 2006.

4. Compliance with the Time Limit for Filing Refund Claims:
The Tribunal found that the refund claims were filed within the permitted time limit of one year, as amended in Section 27 of the Customs Act 1962 effective from 08-04-2011. This was supported by decisions cited by the Appellant.

5. Unjust Enrichment:
The Tribunal reviewed the documents submitted by the Appellant, including certificates from Chartered Accountants and statutory auditors, which indicated that the incidence of excess duty paid was not passed on to any other person. These documents were deemed sufficient to overcome the hurdle of unjust enrichment.

6. Interest on Delayed Refunds:
The Tribunal held that the Appellant was eligible for interest on the delayed refunds under Section 27A of the Customs Act 1962. The interest should be calculated from three months after the filing of the refund applications, as supported by the decision in NEW KAMAL vs UOI and other relevant case laws.

Conclusion:
The Tribunal allowed the appeal filed by the Appellant, granting the refund claims for both BCD and SAD along with interest for the delayed period. The Tribunal found that the Appellant satisfied all conditions for the refunds, including eligibility, timely filing, and absence of unjust enrichment. The Tribunal also overruled the objections raised by the Revenue regarding the non-challenge of assessment, as these were not raised in earlier proceedings or supported by a Show Cause Notice.