2024 (7) TMI 1412 - HC - Customs

Refund of SAD - Applicability of Circular No. 18/2013-Cus dated 29.04.2013 - it is contended that appellant was not aware of the new Circular issued by the Director General of Foreign Trade - HELD THAT - While it may be a fact that, based on the subsequent Circular issued by the Central Board of Excise and Customs (which has since been annulled by the Delhi High Court in the decision in Allen Diesels India Pvt. Ltd. 2016 (2) TMI 247 - DELHI HIGH COURT , the appellant did not satisfy a pre-condition for claiming refund, the fact remains that the payment of 4% SAD effected by the appellant at the time of import of the goods, albeit by debiting the DEPB scrips, was accepted by the Customs Authorities, who recognised the said payment as in the discharge of the appellant's liability in respect of the import duties at the time of import of the goods. If that be the case, then notwithstanding the Circular dated 29.04.2013 aforementioned, the respondents cannot take a stand that there was no payment of the 4% SAD by the appellant at the time of import of the goods. At any rate, since the Delhi High Court has already annulled the Circular dated 29.04.2013, the respondents are now legally obliged to consider the refund application preferred by the appellant independently, on its merits, to see whether the conditions specified in Notification 102/2007-Cus dated 14.09.2007 have been satisfied by the appellant. The Writ Appeal is allowed by setting aside the impugned judgment of the learned Single Judge and by directing the respondents to process the application for refund preferred by the appellant within a period of one month from the date of receipt of a copy of this judgment, after hearing the appellant. Appeal allowed.

Summary

Issues:
Claim for refund of Special Additional Duty (SAD) paid by debiting Duty Entitlement Pass Book (DEPB) scrips - Interpretation of Circular No. 18/2013-Cus dated 29.04.2013 - Applicability of Notification No. 102/2007-Cus dated 14.09.2007 - Judicial review of Customs Authorities' decision.

Analysis:
The appellant, a leading food processing unit in India engaged in export activities, imported raw materials for processing food items for export and paid the basic customs duty and SAD by debiting DEPB scrips obtained as export incentives. The appellant sought a refund of the SAD paid, as per Notification No. 102/2007-Cus, which exempted importers from SAD upon meeting certain conditions. However, Circular No. 18/2013-Cus changed the procedure, requiring initial cash payment for SAD refund eligibility. The appellant's refund claim was denied by Customs Authorities based on this circular.

The learned Single Judge dismissed the Writ Petition, stating the appellant's lack of awareness of the circular was not a valid defense and that Customs Authorities could deny the refund despite initial SAD payment if conditions were not met. The appellant appealed, citing Delhi High Court's decision annulling a similar circular and directing Customs Authorities to reconsider refund applications.

The High Court found merit in the appellant's argument, acknowledging the initial SAD payment by debiting DEPB scrips was accepted by Customs Authorities as fulfilling import duties. Despite the circular's subsequent annulment, the appellant's entitlement to refund under Notification No. 102/2007-Cus remained. The court held Customs Authorities must review the refund application independently, considering the notification's conditions. The Writ Appeal was allowed, setting aside the Single Judge's judgment and directing Customs Authorities to process the refund application within a month.

This judgment clarifies the applicability of Circular No. 18/2013-Cus in SAD refund claims, emphasizing the importance of meeting conditions under relevant notifications. It underscores the need for Customs Authorities to consider refund applications objectively, especially after the annulment of conflicting circulars by higher courts.