2021 (10) TMI 342 - HC - Customs

Refund of CVD and Special Additional Duty (SAD) - claims were either refunded through DEPB credit or rejected on the ground that DEPB scrips cannot be re- credited as per the Board Circular No.18/13/Cus dated 29.4.2013 - N/N. 102/2007-Cus - time limitation - HELD THAT - Indisputably, in N/N.102/2007-Cus dated 14.9.2007, no time period was mentioned for claiming the refund under the said notification. By virtue of the amendment notifications and Circular Nos.6/2008, 10/2012 and 18/2013 issued by Central Board of Excise and Customs, additional restrictions were imposed for availing the exemption. It is well settled that the circular instructions which are administrative in nature cannot efface the effect of the statutory exemption notifications issued. After granting exemption subject to certain conditions, new conditions cannot be introduced by administrative directions or guidelines contrary to the statutory notification or restricting or withdrawing the benefits or imposing strict conditions. Time limitation - main ground for rejecting the refund claims of the assessee is that the DEPB Scheme had lapsed at the time of filing of refund applications after curing the defective applications by the assessee - HELD THAT - Neither Section 27 of the Act of 1962 nor a notification under Section 25 (1), such as the amended notification in No.93/2008-Cus can be used to impose a limitation period and the right to claim refund. The contention of the Revenue that the period of six months during the relevant period is the period of limitation prescribed under Section 27 of the Act of 1962 for refund of claim as per Notification No.102/2007 is wholly untenable for the reason that the refund of SAD would be claimed by the assessee subsequent to completion of the assessment in many cases, as the SAD would be refundable only on subsequent sale which is not in the control of the assessee. Merely for the reason that DEPB Scheme has lapsed, the assessee cannot be deprived of the benefit flowing from the exemption Notification No.102/2007 if the conditions specified therein are fulfilled. If the DEPB Scheme has lapsed, notwithstanding 4% SAD paid through DEPB scrips, the assessee is entitled to the benefit of exemption N/N. 102/2007 by claiming refund through cash - the substantial questions of law are answered in favour of the assessee and against the Revenue.

Summary

Issues Involved:
1. Reliance on the judgment of the Delhi High Court in Allen Diesels India Pvt. Ltd. v. Union of India.
2. Commencement of the limitation period for refund claims.
3. Refund of 4% SAD paid through DEPB scrips in cash.

Issue-wise Detailed Analysis:

1. Reliance on the judgment of the Delhi High Court in Allen Diesels India Pvt. Ltd. v. Union of India:

The Tribunal relied on the judgment of the Delhi High Court in Allen Diesels India Pvt. Ltd. v. Union of India, which invalidated certain circulars issued by the Central Board of Excise and Customs that sought to deny importers and exporters the refund of SAD amount paid by DEPB scrips. The Karnataka High Court upheld this reliance, emphasizing that circulars cannot override statutory notifications. The court noted that the statutory exemption notifications cannot be amended by administrative directions or guidelines, and new conditions cannot be introduced that restrict or withdraw benefits granted by the statutory notification. The court affirmed that the Tribunal was correct in following the Allen Diesels judgment, which is consistent with the principle that administrative circulars cannot whittle down the scope of statutory notifications.

2. Commencement of the limitation period for refund claims:

The Revenue argued that the limitation period for refund claims should commence from the date when the refund claim is made, even if it had deficiencies that were later cured. The court referred to the judgment of the Delhi High Court in Sony India Pvt. Ltd. v. Commissioner of Customs, which held that no limitation period can be imposed for advancing a refund claim since SAD levied under Section 3(5) of the Customs Tariff Act, 1975 is refundable only on the completion of subsequent sale. The court concluded that neither Section 27 of the Customs Act, 1962 nor a notification under Section 25(1) can impose a limitation period for claiming the refund. The court emphasized that the refund of SAD would be claimed subsequent to the completion of the assessment, and the timing of subsequent sales is not within the control of the assessee. Therefore, the Tribunal was correct in holding that the limitation period would not commence from the date of the initial refund claim if it had deficiencies.

3. Refund of 4% SAD paid through DEPB scrips in cash:

The assessee had filed refund claims for 4% SAD paid through DEPB scrips, which were rejected on the grounds that DEPB scrips cannot be re-credited and the claims were time-barred. The court noted that the statutory notifications did not impose any time period for claiming the refund and that the additional restrictions imposed by circulars were invalid. The court referred to the judgment in Union of India v. Hamdard (Waqf) Laboratories, which emphasized that the Revenue must intimate the assessee to remove deficiencies in the refund application promptly. The court concluded that even if the DEPB Scheme had lapsed, the assessee is entitled to the benefit of exemption Notification No.102/2007 by claiming the refund in cash. The Tribunal's decision to allow the refund claims was upheld.

Conclusion:

The Karnataka High Court dismissed the appeal filed by the Revenue, affirming the Tribunal's decision to allow the refund claims of the assessee. The court answered all substantial questions of law in favor of the assessee and against the Revenue, emphasizing that administrative circulars cannot override statutory notifications and that the limitation period for refund claims cannot commence from the date of the initial claim if it had deficiencies.