Issues and procedures for Refund of additional duty: They are in questions and answers format.
Related to the ACT/ Rules:
It isour understanding that such a notification will require amendment to the Customs Act and Rules.
Have there been any amendments to the Customs Act enacted.
There is no amendments to the Customs Act and Rules
The Notification does not state under which Section we are allowed to claim refund of the 4% additional duty paid on import.
The notification is issued under section 25 (1)of the Customs Act 1962.The provision of Customs Act related to refund is applicable to refund of additional duty as per section 8 of the Customs Tariff Act 1975.Therefore ,refund claim can be filed under section 27 of the Customs Act 1962.
Is there a seperate authority within Customs notified to handle these refunds. (like we hv for Drawback of Customs Duty)
No separate authority within the Customs. However,in some place,there is refund section to process refund claim.
Under Customs Refund rules the format for each type of claim is notified. Clarity required on the Form in which such applications have to be made.
The Customs Refund Application (Form) Regulation,1995 and Customs Series Form No. 102 are relevant documents for such claim.
Have the Rules of Unjust enrichment been amended or otherwise it will be impossible to get the refund given the current set of internal guidelines and SC rulings.
No amendments of the Rules of Unjust enrichment(UJE) is required. The conditions of
notification itself take care of UJE. The refund claim of additional duty is to be filed by the importer under section 27(1)(i) of the Customs Act 1962.Subjected to the conditions
of the notification,the refund of additional duty to be sanctioned to the importer by the
jurisdictional Customs Officer.
Where as,under section 27,any person who has borne the
duty incidence have to file refund claim. The any person may or may not be the
importer.
The condition 2(b) of the notification requires that Invoice for sale of
imported goods,shall specifically indicate that no credit of additional duty of customs
levied under sub section 5 of the section 3 of the Customs Tariff Act 1975 shall be
admissible. This condition satisfy requirement under section 28C of the Customs Act
1962.Further,it restricts the passing of additional duty incidence to the buyer of the
imported goods.
Jurisdictional Customs Officer refered in para 2 (c) does it mean that:
there will be centralised process of Refund claims OR
we have to claim at the respective ports at which the goods were imported OR
we hv to claim from the local customs office where the local Sale happens.
The jurisdictional customs officer is the AC or DC(Customs),having jurisdiction
over the Customs port,land customs station or the warehouse where the duty of
Customs was paid as per Regulation 2 of the Customs Refund Application (Form)
Regulation,1995.
Therefore, refund claim is to be filed before jurisdictional customs officer
where duty was paid.
Is there any time limit specified:
for filing of Refund applications from the date of local sales Invoice.
This is gray area. A clarification for time limit is required from the Government.
It should be amended as within six months form the payment of Sales Tax/VAT on the imported goods.
The Notification No 102/2007 does not specify any time limit for filing
refund claim. if any time limit is imposed for filing refund claim ,which is
consequent to the payment of sale tax on the imported goods at the time of
selling goods in domestic market, then, no refund of additional duty can be
availed for the goods sold after six months from duty payment. This is not
the legislator intention.
The additional duty of Customs is not a duty defined in the Customs Act.
The refund of duty under section 27 of the Customs Act is consequent to an order of assessment,which is an import activity.
Where as, the refund of additional duty under present notification is consequent to post import activity of selling imported goods in the domestic market. Both the refund claims arises out of two different situations . Further No UJE provisions are attracted for refund of
additional duty. Then,only provision of time limit under section 27 is attracted, is not legally correct.
As soon as goods are sold in the domestic market on payment of sale tax
and sale Invoice contains evidence of not availing Cenvat and payment of
sale tax,then,the importer is eligible for refund of additional duty of customs.
Hence, no time limit to file refund claim of the additional duty of customs.
It is anticipated that time limit to file refund claim for additional duty is
prone to litigation. Therefore, the above aspect of time limit needs clarification from the Government.
for filing of Refund applications from the date of Import/payment of Customs Duty.
Within six months from the date of duty payment as per section 27(1)(i)(b) of
the Customs Act 1962.The subsection 8 of the section 3 of the Customs Tariff
Act 1975 states that provision of the Customs Act 1962 and rules and regulation
made thereunder relating to refunds also apply to the duty chargeable under the
section 3.
The additional duty of customs is charged under sub section 5 of the
section 3 of the Customs Tariff Act 1975.Therefore provision of section 27 of the
Customs Act are also applicable for refund of additional duty of customs.
Can refunds be filed for imports made prior to the date of this notification but the local sale is happening on or after 14th Sept.
No refund prior to this notification. The notification is prospective .
In the event of the claim being rejected do we follow the same / current process of Appeal or is there some different provision.
Yes, You have to follow current process of Appeal. The claim rejection is also adjudication order passed by the Jurisdictional officer and same can be appealed under Customs Act.
Transction Issues:
In trading Business Margins are very thin. It is therefore a possibility that the Refund amount could be more than the Sales Tax charged:
CST billing at 3%.
CST billing at 1%.
In Business sometimes transactions do happen at negative.
In such cases will the Refund be limited to the amount of Sales Tax charged in the local sales invoice or will we get full refund. Will this be treated as unjust enrichment.
The conditions 2(d) of the Notification 102/2007 says that appropriate sales tax or value added tax is to be paid on the sale of the imported goods. The incidence of paying sales tax is important and not the amount of tax equal to additional duty. Therefore, you will get full refund of the additional duty.
Provisions of UJE is ruled out as discussed earlier.
In on going transactions where imports happen repeatedly it is almost impossible to have a one to one relation between the specific item imported under a Bill of Entry and a local Sales Invoice.
Is a one to one corelation required to claim Refund.
Yes ,one to one correlation is required for claiming Refund.
If required, this could be one reason for rejection by the authorities as it will be almost impossible to provide this in run rate items that do not have Serial nos. (ex Networking Cables and Components).
It is can be done easily. The Sale Invoices may contain all details that goods covered under this invoice are imported vide so and so B/E.
Documents required for claimingrefund need clarity. The Notification says:
"provide copies of the following documents". Does it mean that Original Documents are not required.
Only Original documents are required for processing claim and endorsing that refund is already availed on such documents. It is necessary to verify genuineness of documents and restricting repeated claim on the same documents.
"document evidencing payment of the said additional duty". Does this mean copy of TR6 challan or Bill of Entry copy.
The TR6 challan is required as proof of duty payment.
"documents evidencing payment of appropriate sales tax or value added tax". Does it mean we will have to produce copy of our Sales tax Returns and or Sales Tax payment challan. There will not be any specific one local sales Invoice to oneSales Tax payment challan as Taxes are paid based on monthly returns after taking credit of the VAT paid on Purchase.
The notification has not specified any documents. But any documentary evidence
which has proof that Sale Tax/VAT is paid to the concerned Government department
should be sufficient.
The transaction cost for claiming refund will be very high and the purpose.
Yes ,it is true.
A single Import will have 100's of local sales invoices each thru different states and at different points in time.
Consolidation of claims must be allowed.
Yes
If Original documents are required for verification before filling / payment of claims then this will be a challenge.
Yes
Monday, December 17, 2007
Wednesday, December 05, 2007
Refund of Additional duty of customs consequent to
Notification No. 102/2007-Customs dated 14th Sept,2007
The following points may be taken into consideration before
filing and claiming refund claim of the additional duty of customs.
1) Eligibility: when goods imported into India for subsequent sale .It covers only trading
goods who are liable to suffer sales tax in place of sale.
2) Time period for filing refund claim: Within six months from the date of duty payment as
.
per section 27(1)(i)(b) of the Customs Act 1962.The subsection 8 of the
section 3 of the Customs Tariff Act 1975 states that provision of the Customs
Act 1962 and rules and regulation made thereunder relating to refunds also
apply to the duty chargeable under the section 3.The additional duty of
customs is charged under sub section 5 of the section 3 of the Customs
Tariff Act 1975.Therefore provision of section 27 of the Customs Act are
also applicable for refund of additional duty of customs. The refund claim is to
be filed in the prescribed format under Customs Refund Application(Form)
Regulation ,1995.However, Unjust enrichment provisions are not attracted.
The notification itself says that it is the importer who is eligible for refund
claim provided he fulfill certain conditions as stated in the para 2 of the
Notification No 102.2007.Further the refund claim arose consequent to
payment of sales tax on imported goods and not in pursuance of
assessment order. There is no need to challenge assessment order before
appellate authority for such refund claim as held by Honorable SC in case
of Priya Blue and Flock India.
Argument for no time limit to file refund claim
a)But the Notification No 102/2007 does not specify any time limit for filing
refund claim. if any time limit is imposed for filing refund claim which is
consequent to the payment of sale tax on the imported goods at the time of
selling goods in domestic market, then, no refund of additional duty can be
availed for the goods sold after six months from duty payment. This is not
the legislator intention.
b)The additional duty of Customs is not a duty defined in the Customs Act.
The refund of duty is not to consequent to an order of assessment. No UJE
provisions are attracted. Then,only provision of time limit under section 27
is attracted,it is not legally correct.
As soon as goods are sold in the domestic market on payment of sale tax
and sale Invoice contains evidence of not availing Cenvat and payment of
sale tax,then,the importer is eligible for refund of additional duty of customs.
Hence, no time limit to file refund claim of the additional duty of customs.
3)Conditions to be satisfied for eligibility of refund claim as para 2 of the Notification
No 102/2007:
(a) The importer have to pay all duties;
(b) Not to avail CENVAT credit of the additional duty of customs .The
sale invoices should indicate specifically indicate in the invoice
that in respect of the goods covered therein, no credit of the
additional duty of customs levied under sub-section (5) of section 3
of the Customs Tariff Act, 1975 shall be admissible;
(c) The Refund claim to be filed at the place of assessment and duty
was paid on the imported goods.
(d) the importer shall, inter alia, provide copies of the following
documents along with the refund claim:
(i) TR-6 Challan as documentary evidence for payment of the
said additional duty;
(ii) Sale Invoices of the imported goods in respect of which
refund of the said additional duty is claimed;
(iii) documents evidencing payment of appropriate sales tax or
value added tax, as the case may be, by the importer, on sale of
such imported goods.
4) No test of Unjust Enrichment(UJE).
If the sale Invoices of the goods carries proof of Sale
Tax or VAT payment and non-admissibility of the Cenvat credit on account of said additional duty of
customs then the importer is eligible for refund of duty.
It is concluded that the refund claim may filed on the strength of Sale Invoices. There is no UJE bar.
No time limit restriction if refund claim is filed within six month of duty payment. However,any claim
after six months of duty payment may attract provisions of time bar,which may be contested by the
customs department.
The department may also issue further clarification in this regards.
Ravindra Kumar
Notification No. 102/2007-Customs dated 14th Sept,2007
The following points may be taken into consideration before
filing and claiming refund claim of the additional duty of customs.
1) Eligibility: when goods imported into India for subsequent sale .It covers only trading
goods who are liable to suffer sales tax in place of sale.
2) Time period for filing refund claim: Within six months from the date of duty payment as
.
per section 27(1)(i)(b) of the Customs Act 1962.The subsection 8 of the
section 3 of the Customs Tariff Act 1975 states that provision of the Customs
Act 1962 and rules and regulation made thereunder relating to refunds also
apply to the duty chargeable under the section 3.The additional duty of
customs is charged under sub section 5 of the section 3 of the Customs
Tariff Act 1975.Therefore provision of section 27 of the Customs Act are
also applicable for refund of additional duty of customs. The refund claim is to
be filed in the prescribed format under Customs Refund Application(Form)
Regulation ,1995.However, Unjust enrichment provisions are not attracted.
The notification itself says that it is the importer who is eligible for refund
claim provided he fulfill certain conditions as stated in the para 2 of the
Notification No 102.2007.Further the refund claim arose consequent to
payment of sales tax on imported goods and not in pursuance of
assessment order. There is no need to challenge assessment order before
appellate authority for such refund claim as held by Honorable SC in case
of Priya Blue and Flock India.
Argument for no time limit to file refund claim
a)But the Notification No 102/2007 does not specify any time limit for filing
refund claim. if any time limit is imposed for filing refund claim which is
consequent to the payment of sale tax on the imported goods at the time of
selling goods in domestic market, then, no refund of additional duty can be
availed for the goods sold after six months from duty payment. This is not
the legislator intention.
b)The additional duty of Customs is not a duty defined in the Customs Act.
The refund of duty is not to consequent to an order of assessment. No UJE
provisions are attracted. Then,only provision of time limit under section 27
is attracted,it is not legally correct.
As soon as goods are sold in the domestic market on payment of sale tax
and sale Invoice contains evidence of not availing Cenvat and payment of
sale tax,then,the importer is eligible for refund of additional duty of customs.
Hence, no time limit to file refund claim of the additional duty of customs.
3)Conditions to be satisfied for eligibility of refund claim as para 2 of the Notification
No 102/2007:
(a) The importer have to pay all duties;
(b) Not to avail CENVAT credit of the additional duty of customs .The
sale invoices should indicate specifically indicate in the invoice
that in respect of the goods covered therein, no credit of the
additional duty of customs levied under sub-section (5) of section 3
of the Customs Tariff Act, 1975 shall be admissible;
(c) The Refund claim to be filed at the place of assessment and duty
was paid on the imported goods.
(d) the importer shall, inter alia, provide copies of the following
documents along with the refund claim:
(i) TR-6 Challan as documentary evidence for payment of the
said additional duty;
(ii) Sale Invoices of the imported goods in respect of which
refund of the said additional duty is claimed;
(iii) documents evidencing payment of appropriate sales tax or
value added tax, as the case may be, by the importer, on sale of
such imported goods.
4) No test of Unjust Enrichment(UJE).
If the sale Invoices of the goods carries proof of Sale
Tax or VAT payment and non-admissibility of the Cenvat credit on account of said additional duty of
customs then the importer is eligible for refund of duty.
It is concluded that the refund claim may filed on the strength of Sale Invoices. There is no UJE bar.
No time limit restriction if refund claim is filed within six month of duty payment. However,any claim
after six months of duty payment may attract provisions of time bar,which may be contested by the
customs department.
The department may also issue further clarification in this regards.
Ravindra Kumar
Thursday, November 22, 2007
Monday, November 19, 2007
Monday, November 12, 2007
Whether each time duty under protest has to be registered with The Custom Department or once it is registered then it is valid for subsequent import clearance?
There is no rules under Customs Act 1962 prescribed for exact procedure to be followed in case duty paid under protest to the Customs department.But various Court rulings and Public Notices are issued by the department which state the procedures to be followed by the Trade for duty under protest.
Logically,if any person is registering protest than it is assumed that in future also he is paying duty under protest.Suppose,if he pay duty without any protest for future clearance then it
means that earlier registered protest is deemed to have been vacated.The Importer has accepted contention of the department for paying duty.In another situation,once duty is paid under protest,the importer has to pay under protest till it is vacated by the department.
As per Atice Industries ltd Vs Collector,1991(54)E.L.T 285(Tribunal),and,Fire composite (P) ltd Vs Collector ,1995(78) E.L.T 73 (Tribunal) duty is paid under protest till the letter of protest is vacated
Under duty protest,only situation of refund may arise but not the short collection of duty.Therefore,it is the importer who is interested in getting stay vacated.
There is no rules under Customs Act 1962 prescribed for exact procedure to be followed in case duty paid under protest to the Customs department.But various Court rulings and Public Notices are issued by the department which state the procedures to be followed by the Trade for duty under protest.
Logically,if any person is registering protest than it is assumed that in future also he is paying duty under protest.Suppose,if he pay duty without any protest for future clearance then it
means that earlier registered protest is deemed to have been vacated.The Importer has accepted contention of the department for paying duty.In another situation,once duty is paid under protest,the importer has to pay under protest till it is vacated by the department.
As per Atice Industries ltd Vs Collector,1991(54)E.L.T 285(Tribunal),and,Fire composite (P) ltd Vs Collector ,1995(78) E.L.T 73 (Tribunal) duty is paid under protest till the letter of protest is vacated
Under duty protest,only situation of refund may arise but not the short collection of duty.Therefore,it is the importer who is interested in getting stay vacated.
Thursday, November 08, 2007
The public notice issued by the Chennai custom House for procedure to be followed for Duty under protest is reproduced below:
OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE
33, RAJAJI SALAI, CHENNAI – 600 001.
PUBLIC NOTICE 7 /2002
Sub: Registering of protest for payment of duty by Importers – Reg.
********
Attention of the importers, Custom House Agents and members of the trading public is invited to this Office Public Notice No.128/76 and 159/85 regarding registration of protest wherever Customs Duty is paid under protest. In continuation of these public Notices, this P.N. is issued.
2. Instances have come to notice that the importers are registering their protest in a simple letter form without adhering the procedure setout in the said Public Notices. Such simple protests in payment of duty without observing the conditions laid down in the above Public Notices and the following procedures cannot be construed as protest and noclaim whatsoever can be made based on such simple protests. Therefore, the Importers / Custom House Agents are instructed to adhere to the following procedures:
i) When an importer desires to pay duty under protest, he shall make an endorsement to that effect on the reverse of the original Bill of entry/EDI form and also furnish the grounds on which duty is paid under protest.
ii) Such Bills of entry containing the above mentioned endorsement shall be submitted to the respective Group Appraiser and Asst./Deputy Commissioners of Customs for counter-signature.
iii) Importers/Clearing Agents shall present such Bills of entry to the centralized Unit (Refunds Section) for registration.
iv) The Centralised Unit i.e., Refund Section shall register the particulars of Bills of Entry etc including the grounds on which duty is paid under protest in a separate register and also assign the Serial No. and date on the Original, duplicate and triplicate copies of Bills of Entry.
v) Importers/Custom House Agents shall ensure that protest stamp is affixed on the original, duplicate and triplicate copies of Bills of entry etc. by the Refunds Section and also see that the Serial No. with date is entered in the Bills of Entry etc. countersigned by the Officers atleast in the level of Deputy Office Superintendent of the Refund Section.
Sd/-
(JOSEPH DOMINIC)
COMMISSIONER OF CUSTOMS(SEA PORT)
F.No.Misc.169/2001 – Enq.
Custom House, Chennai –1.
Dated:21.01.2002
// ATTESTED //
(S. SANKARAVADIVELU)
DY. COMMISSIONER OF CUSTOMS(ENQ)
Back to Main Index
OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE
33, RAJAJI SALAI, CHENNAI – 600 001.
PUBLIC NOTICE 7 /2002
Sub: Registering of protest for payment of duty by Importers – Reg.
********
Attention of the importers, Custom House Agents and members of the trading public is invited to this Office Public Notice No.128/76 and 159/85 regarding registration of protest wherever Customs Duty is paid under protest. In continuation of these public Notices, this P.N. is issued.
2. Instances have come to notice that the importers are registering their protest in a simple letter form without adhering the procedure setout in the said Public Notices. Such simple protests in payment of duty without observing the conditions laid down in the above Public Notices and the following procedures cannot be construed as protest and noclaim whatsoever can be made based on such simple protests. Therefore, the Importers / Custom House Agents are instructed to adhere to the following procedures:
i) When an importer desires to pay duty under protest, he shall make an endorsement to that effect on the reverse of the original Bill of entry/EDI form and also furnish the grounds on which duty is paid under protest.
ii) Such Bills of entry containing the above mentioned endorsement shall be submitted to the respective Group Appraiser and Asst./Deputy Commissioners of Customs for counter-signature.
iii) Importers/Clearing Agents shall present such Bills of entry to the centralized Unit (Refunds Section) for registration.
iv) The Centralised Unit i.e., Refund Section shall register the particulars of Bills of Entry etc including the grounds on which duty is paid under protest in a separate register and also assign the Serial No. and date on the Original, duplicate and triplicate copies of Bills of Entry.
v) Importers/Custom House Agents shall ensure that protest stamp is affixed on the original, duplicate and triplicate copies of Bills of entry etc. by the Refunds Section and also see that the Serial No. with date is entered in the Bills of Entry etc. countersigned by the Officers atleast in the level of Deputy Office Superintendent of the Refund Section.
Sd/-
(JOSEPH DOMINIC)
COMMISSIONER OF CUSTOMS(SEA PORT)
F.No.Misc.169/2001 – Enq.
Custom House, Chennai –1.
Dated:21.01.2002
// ATTESTED //
(S. SANKARAVADIVELU)
DY. COMMISSIONER OF CUSTOMS(ENQ)
Back to Main Index
Saturday, October 20, 2007
Refund of duty for Re-export cargo,whether it is drawback under section 74 or refund of duty under section 27 of the Customs Act 1962
This depends on case to case basis for the goods in question.At what stage of Asseement, cleared for Home-consumption or not,whether payment has acquired the characteristics of the duty, whether it is repair or return cargo,whether ,it is temporary import of the machinary,etc,would decide whether it is refund case or drawback case.
The conceptually if the goods are exported goods then it is draw back case and if they are imported goods then it is case of the refund.
what is imported goods?
If goods were not cleared for Home consumption. Then the goods remained Imported goods only .You have to file refund claim for any duty paid on such imported cargo.
But the payment has not acquired the characteristics of the duty and it is deposit in anticipation of duty liability.
The provision of Section 27 are attracted only for Refund of duty and not for Refund of duty deposit. In the present case, the goods were not cleared for Home consumption. No passing of duty incidence can take place, as good never crossed Customs barrier. Even Assessment was not completed.
This depends on case to case basis for the goods in question.At what stage of Asseement, cleared for Home-consumption or not,whether payment has acquired the characteristics of the duty, whether it is repair or return cargo,whether ,it is temporary import of the machinary,etc,would decide whether it is refund case or drawback case.
The conceptually if the goods are exported goods then it is draw back case and if they are imported goods then it is case of the refund.
what is imported goods?
If goods were not cleared for Home consumption. Then the goods remained Imported goods only .You have to file refund claim for any duty paid on such imported cargo.
But the payment has not acquired the characteristics of the duty and it is deposit in anticipation of duty liability.
The provision of Section 27 are attracted only for Refund of duty and not for Refund of duty deposit. In the present case, the goods were not cleared for Home consumption. No passing of duty incidence can take place, as good never crossed Customs barrier. Even Assessment was not completed.
Friday, October 19, 2007
Whether refund is to be filed directly before the AC/DC(Refund) ??
The eligibility of refund can be decided either by the proper assessing officer or the appellate authority is the current stand of the Customs department.Before the Priya Blue and Flock India cases, all refund claim were filed before the AC/DC(Refund) without going to route of Appellate forum.The main contention is that the equal adjudication authority of Refund cannot sit in the matter decided by the Group AC/DC.The assessment is final and filing a refund claim is a challenge to the assessment order.
But, whether the Assistant Commissioner of Customs (Refund) is the proper adjudication authority for the purpose of a refund claim under Customs Act 1962?
Eligibility of Refund Claim
The Assistant Commissioner of Customs (Refund) is not sitting over the Judgement of equal Quasi-Judicial Authority.The Assistant Commissioner of Customs of Refund section is a different quasi-judicial authority than the Assistant Commissioner of Customs or Deputy Commissioner of Customs of Assessing Group. Both of them have separate jurisdiction for adjudication under the Customs Act 1962.
The Assistant Commissioner of Customs (Refund) exercise power under section 27 of the Customs Act whereas the Assistant / Deputy Commissioner of Customs of the Assessing Group exercise power under section’s 17 and 18 of the Customs Act.
Under the Customs Act, various adjudication authority pass various orders on the basis of same order of assessment for the imported goods. This is illustrated below.
Let us understand who is Adjudication authority.
The Adjudication authority have been defined under section 2 of the Customs Act 1962 as ``
In this Act, unless the context otherwise requires. (1) “Adjudication Authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, (Commissioner (Appeal) or Appellate Tribunal). ``
How is the Customs works? .It is more like sequence assembly operations .
The bill of entry in relation to the imported goods is presented to the Assessing Group. The Assistant / Deputy Commissioner of Customs of the Group may assess under first or second appraisement .
In case of the first appraisement, the Assistant /Deputy Commissioner of Examination gives the examination report. The concerned Assistant /Deputy Commissioner of the Group assess the goods based on the examination report of the Assistant /Deputy Commissioner of the Examination section.
Therefore, even, the Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (Examination) both are equal quasi-judicial authority but the Assistant /Deputy Commissioner (Group) pass order of assessment based on the Assistant /Deputy Commissioner (Examination) report.
Similarly, under second Appraisement, on some occasion, the Assistant /Deputy Commissioner (Group) re-assess the goods based on the Assistant /Deputy Commissioner (Examination) report. This re-assessment of goods may involve change in classification, valuation and adjudication proceedings, as the case may be.
Further, in case of assessment for related party transaction, the Assistant /Deputy Commissioner (Group) assess the goods provisionally under section 18 of the Customs Act. Another adjudication authority is namely Assistant /Deputy Commissioner of the Special Valuation Branch (SVB) who investigate the related party transactional value. Based on the order of Assistant /Deputy Commissioner (SVB), the goods are finally assessed with or without loading of value by the concerned Assistant /Deputy Commissioner (Group). Moreover, the jurisdiction of the order of the Assistant /Deputy Commissioner (SVB) in matter of the particular related party have all India implication. Hence, even though Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (SVB) are equal quasi-judicial authority, the Assistant /Deputy Commissioner (Group) pass the order of assessment based on the order of valuation issued by the Assistant /Deputy Commissioner (SVB).
Identically, all the refund claim, drawback claim and project finalisation cases are settled only after the concurrence of the Assistant /Deputy Commissioner in charge of Audit. Therefore, the Assistant /Deputy Commissioner, who are passing refund order, settling drawback claim and finalizing the project import are of same level quasi-judicial authority as the Assistant /Deputy Commissioner in charge of the Audit. All such orders are not amounting res Judicata.
The Assistant Commissioner of refund section is proper quasi-judicial authority in case of refund claim as per rules and relevant section of the Customs Act 1962. Any person can file refund claim where he has paid excess duty in pursuance of an order of assessment or borne by him. Therefore, refund claim can be filed after the order of assessment. There is a time limit to do so.
As far as eligibility of refund claim is considered, the Assistant Commissioner (Refund) may seek opinion from the concerned Assistant /Deputy Commissioner (Group), as done, at the time of assessment by the Assistant /Deputy Commissioner (Group), based on report of Assistant /Deputy Commissioner (Examination), Assistant /Deputy Commissioner (SVB) and Assistant /Deputy Commissioner (Audit), as the case may be.
It is arbitrary and discriminatory to ask to take appellate forum without processing refund claim as per provision of the Customs Act 1962.
Under Section 122 of the Customs Act 1962, there are three class of adjudication authorities for confiscation and penalties namely a Gazetted officer of Customs lower rank than an Assistant Commissioner of Customs (AC), than Assistant /Deputy Commissioner and lastly Commissioner of Customs or a Joint commissioner of customs, based on value of goods liable for confiscation.
But for assessment of goods and passing refund order, there is no value limit for Assistant /Deputy Commissioner of the Customs.
Various orders and decisions are passed by respective Assistant /Deputy Commissioner, being adjudication authority under various sections of the Customs Act 1962. At times, order passed by an Assistant /Deputy Commissioner becomes input for other Assistant /Deputy Commissioner orders. As in the instant case, the order of assessment passed by Assistant /Deputy Commissioner (Group) is input for Assistant /Deputy Commissioner (Refund) to process claim. In another words, if there is no order of assessment, then no refund claim to process. Hence, refund claim is based on order of assessment and not on the Order-in-Appeal. The refund claim based on Order-in-Appeal does not suffer any time limit under section 27 of the Customs Act 1962 based on duty payment date .
The eligibility of refund can be decided either by the proper assessing officer or the appellate authority is the current stand of the Customs department.Before the Priya Blue and Flock India cases, all refund claim were filed before the AC/DC(Refund) without going to route of Appellate forum.The main contention is that the equal adjudication authority of Refund cannot sit in the matter decided by the Group AC/DC.The assessment is final and filing a refund claim is a challenge to the assessment order.
But, whether the Assistant Commissioner of Customs (Refund) is the proper adjudication authority for the purpose of a refund claim under Customs Act 1962?
Eligibility of Refund Claim
The Assistant Commissioner of Customs (Refund) is not sitting over the Judgement of equal Quasi-Judicial Authority.The Assistant Commissioner of Customs of Refund section is a different quasi-judicial authority than the Assistant Commissioner of Customs or Deputy Commissioner of Customs of Assessing Group. Both of them have separate jurisdiction for adjudication under the Customs Act 1962.
The Assistant Commissioner of Customs (Refund) exercise power under section 27 of the Customs Act whereas the Assistant / Deputy Commissioner of Customs of the Assessing Group exercise power under section’s 17 and 18 of the Customs Act.
Under the Customs Act, various adjudication authority pass various orders on the basis of same order of assessment for the imported goods. This is illustrated below.
Let us understand who is Adjudication authority.
The Adjudication authority have been defined under section 2 of the Customs Act 1962 as ``
In this Act, unless the context otherwise requires. (1) “Adjudication Authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, (Commissioner (Appeal) or Appellate Tribunal). ``
How is the Customs works? .It is more like sequence assembly operations .
The bill of entry in relation to the imported goods is presented to the Assessing Group. The Assistant / Deputy Commissioner of Customs of the Group may assess under first or second appraisement .
In case of the first appraisement, the Assistant /Deputy Commissioner of Examination gives the examination report. The concerned Assistant /Deputy Commissioner of the Group assess the goods based on the examination report of the Assistant /Deputy Commissioner of the Examination section.
Therefore, even, the Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (Examination) both are equal quasi-judicial authority but the Assistant /Deputy Commissioner (Group) pass order of assessment based on the Assistant /Deputy Commissioner (Examination) report.
Similarly, under second Appraisement, on some occasion, the Assistant /Deputy Commissioner (Group) re-assess the goods based on the Assistant /Deputy Commissioner (Examination) report. This re-assessment of goods may involve change in classification, valuation and adjudication proceedings, as the case may be.
Further, in case of assessment for related party transaction, the Assistant /Deputy Commissioner (Group) assess the goods provisionally under section 18 of the Customs Act. Another adjudication authority is namely Assistant /Deputy Commissioner of the Special Valuation Branch (SVB) who investigate the related party transactional value. Based on the order of Assistant /Deputy Commissioner (SVB), the goods are finally assessed with or without loading of value by the concerned Assistant /Deputy Commissioner (Group). Moreover, the jurisdiction of the order of the Assistant /Deputy Commissioner (SVB) in matter of the particular related party have all India implication. Hence, even though Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (SVB) are equal quasi-judicial authority, the Assistant /Deputy Commissioner (Group) pass the order of assessment based on the order of valuation issued by the Assistant /Deputy Commissioner (SVB).
Identically, all the refund claim, drawback claim and project finalisation cases are settled only after the concurrence of the Assistant /Deputy Commissioner in charge of Audit. Therefore, the Assistant /Deputy Commissioner, who are passing refund order, settling drawback claim and finalizing the project import are of same level quasi-judicial authority as the Assistant /Deputy Commissioner in charge of the Audit. All such orders are not amounting res Judicata.
The Assistant Commissioner of refund section is proper quasi-judicial authority in case of refund claim as per rules and relevant section of the Customs Act 1962. Any person can file refund claim where he has paid excess duty in pursuance of an order of assessment or borne by him. Therefore, refund claim can be filed after the order of assessment. There is a time limit to do so.
As far as eligibility of refund claim is considered, the Assistant Commissioner (Refund) may seek opinion from the concerned Assistant /Deputy Commissioner (Group), as done, at the time of assessment by the Assistant /Deputy Commissioner (Group), based on report of Assistant /Deputy Commissioner (Examination), Assistant /Deputy Commissioner (SVB) and Assistant /Deputy Commissioner (Audit), as the case may be.
It is arbitrary and discriminatory to ask to take appellate forum without processing refund claim as per provision of the Customs Act 1962.
Under Section 122 of the Customs Act 1962, there are three class of adjudication authorities for confiscation and penalties namely a Gazetted officer of Customs lower rank than an Assistant Commissioner of Customs (AC), than Assistant /Deputy Commissioner and lastly Commissioner of Customs or a Joint commissioner of customs, based on value of goods liable for confiscation.
But for assessment of goods and passing refund order, there is no value limit for Assistant /Deputy Commissioner of the Customs.
Various orders and decisions are passed by respective Assistant /Deputy Commissioner, being adjudication authority under various sections of the Customs Act 1962. At times, order passed by an Assistant /Deputy Commissioner becomes input for other Assistant /Deputy Commissioner orders. As in the instant case, the order of assessment passed by Assistant /Deputy Commissioner (Group) is input for Assistant /Deputy Commissioner (Refund) to process claim. In another words, if there is no order of assessment, then no refund claim to process. Hence, refund claim is based on order of assessment and not on the Order-in-Appeal. The refund claim based on Order-in-Appeal does not suffer any time limit under section 27 of the Customs Act 1962 based on duty payment date .
Monday, March 05, 2007
Ground for Refunds
On import or export of goods, at times, it is found that duty has been paid in excess of what was actually leviable on the goods. Such excess payment may be due to lack of information on the part of importer/exporter or non-submission of documents required for claim of lower value or rate of duty. Sometimes, such excess payment of duty may be due to shortage/short landing, pilferage of goods or even incorrect assessment of duty by Customs.
who can claim Refund
In such cases, refund of excess amount of duty paid can be claimed by the importer or exporter. If any excess interest has been paid by the importer/exporter on the amount of duty paid in excess, its refund can also be claimed. Section 27 of the Customs Act, 1962 refers in this regard.
The refund of any duty and interest, can be claimed either by a person who has paid the duty in pursuance to an order of assessment or a person who has borne the duty.
Procedure to claim Refund
Any person claiming refund of any duty or interest, has to make an application in duplicate in the form as prescribed in the Customs Refund Application(Form) Regulations, 1995, to the jurisdictional Deputy/Assistant Commissioner of Customs.
Time limitation to file Refund
Such application is to be made before the expiry of six months from the date of payment of duty and interest. However, in case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, application for refund can be made before the expiry of one year from the date of payment of duty and interest.
2. The application for refund is required to be filed with documentary or other evidence including documents relating to assessment, sales invoice and other like documents to support the claim that the duty and interest was paid in excess, incidence of duty or interest has not been passed on by him to any other person, and the refund has not been obtained already.
3. Where on scrutiny, the application is found to be complete in all respects, the Customs issues an acknowledgement in the prescribed Form as per the Customs Refund Application(Form) Regulations, 1995. However, in case the application is found to be incomplete, the Customs has to return the application to the applicant, pointing out the deficiency. The applicant has to re-submit the application after making good the deficiency, for scrutiny by Customs again for admissibility of the refund claim.
Relevant dates for submission of a refund application:
4. As stated above, application for refund is required to be filed within six months from the date of payment of duty and interest and in case of any import made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital, application for refund is to be filed within one year from the date of payment of duty and interest. However, the limitation of one year or six months, as the case may be, does not apply where any duty and interest has been paid under protest. Normally, the time limit of six months or one year is computed from the date of payment of duty, however, in following situations, such time limit is computed differently:
(a) In case of goods which are exempt from payment of duty by an ad-hoc exemption order issued under sub-section (2) of section 25 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of issue of such order;
(b) Where any duty is paid provisionally under section 18 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of adjustment of duty after the final assessment thereof;
(c) The date of payment of any duty and interest in relation to a person, other than the importer shall be 'the date of purchase of goods' by such person.
Processing of refund claim :
5. The application of refund found to be complete in all respects by Customs, is processed to see if the whole or any part of the duty and interest paid by the applicant is refundable. In case, the whole or any part of the duty and interest is found to be refundable, an order for refund is passed. However, in view of the provisions of unjust enrichment enshrined in the Customs Act, the amount found refundable has to be transferred to the Consumer Welfare Fund. Only in following situations, the amount of duty and interest found refundable, instead of being credited to the Consumer Welfare Fund, is to be paid to the applicant:
(a) if the importer has not passed on the incidence of such duty and interest to any other person;
(b) if imports were made by an individual for his personal use;
(c) if the buyer who has borne the duty and interest, has not passed on the incidence of such duty and interest to any other person;
(d) if amount found refundable relates to export duty paid on goods which has returned to exporter as specified in section 26;
(e) if amount relates to drawback of duty payable under section 74 and 75;
(f) if the duty or interest was borne by a class of applicants which has been notified for such purpose in the Official Gazette by the Central Government.
Interest on delayed refund :
6. The Customs has to finalize refund claims immediately after receipt of the refund application in proper form along-with all the documents. In case, any duty ordered to be refunded to an applicant is not refunded within 3 months from the date of receipt of application for refund, an interest @ 15% is to be paid to the applicant. The interest is to be paid for the period from the date immediately after the expiry of 3 months from the date of receipt of such application till be date of refund of such duty. For the purpose of payment of interest, the application is deemed to have been received on the date on which a complete application, as acknowledged by the proper officer of Customs, has been made.
7. Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner/Deputy Commissioner of Customs, the order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court, as the case may be is deemed to be an order for the purpose of payment of interest on delayed refund.
8. The interest on delayed refund is payable only in respect of delayed refunds of Customs duty and no interest is payable in respect of deposits such as deposits for project imports, security for provisional release of goods etc.
(Reference : The Customs Refund Application (Form) Regulations, 1995 issued vide notification no. 34/95(NT)-Customs, dated 26/5/1995, Notifications no. 32/95(NT)-Customs, dated 26/5/1995. Circular No. 59/95-Cus., dated 5/6/1995)
On import or export of goods, at times, it is found that duty has been paid in excess of what was actually leviable on the goods. Such excess payment may be due to lack of information on the part of importer/exporter or non-submission of documents required for claim of lower value or rate of duty. Sometimes, such excess payment of duty may be due to shortage/short landing, pilferage of goods or even incorrect assessment of duty by Customs.
who can claim Refund
In such cases, refund of excess amount of duty paid can be claimed by the importer or exporter. If any excess interest has been paid by the importer/exporter on the amount of duty paid in excess, its refund can also be claimed. Section 27 of the Customs Act, 1962 refers in this regard.
The refund of any duty and interest, can be claimed either by a person who has paid the duty in pursuance to an order of assessment or a person who has borne the duty.
Procedure to claim Refund
Any person claiming refund of any duty or interest, has to make an application in duplicate in the form as prescribed in the Customs Refund Application(Form) Regulations, 1995, to the jurisdictional Deputy/Assistant Commissioner of Customs.
Time limitation to file Refund
Such application is to be made before the expiry of six months from the date of payment of duty and interest. However, in case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, application for refund can be made before the expiry of one year from the date of payment of duty and interest.
2. The application for refund is required to be filed with documentary or other evidence including documents relating to assessment, sales invoice and other like documents to support the claim that the duty and interest was paid in excess, incidence of duty or interest has not been passed on by him to any other person, and the refund has not been obtained already.
3. Where on scrutiny, the application is found to be complete in all respects, the Customs issues an acknowledgement in the prescribed Form as per the Customs Refund Application(Form) Regulations, 1995. However, in case the application is found to be incomplete, the Customs has to return the application to the applicant, pointing out the deficiency. The applicant has to re-submit the application after making good the deficiency, for scrutiny by Customs again for admissibility of the refund claim.
Relevant dates for submission of a refund application:
4. As stated above, application for refund is required to be filed within six months from the date of payment of duty and interest and in case of any import made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital, application for refund is to be filed within one year from the date of payment of duty and interest. However, the limitation of one year or six months, as the case may be, does not apply where any duty and interest has been paid under protest. Normally, the time limit of six months or one year is computed from the date of payment of duty, however, in following situations, such time limit is computed differently:
(a) In case of goods which are exempt from payment of duty by an ad-hoc exemption order issued under sub-section (2) of section 25 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of issue of such order;
(b) Where any duty is paid provisionally under section 18 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of adjustment of duty after the final assessment thereof;
(c) The date of payment of any duty and interest in relation to a person, other than the importer shall be 'the date of purchase of goods' by such person.
Processing of refund claim :
5. The application of refund found to be complete in all respects by Customs, is processed to see if the whole or any part of the duty and interest paid by the applicant is refundable. In case, the whole or any part of the duty and interest is found to be refundable, an order for refund is passed. However, in view of the provisions of unjust enrichment enshrined in the Customs Act, the amount found refundable has to be transferred to the Consumer Welfare Fund. Only in following situations, the amount of duty and interest found refundable, instead of being credited to the Consumer Welfare Fund, is to be paid to the applicant:
(a) if the importer has not passed on the incidence of such duty and interest to any other person;
(b) if imports were made by an individual for his personal use;
(c) if the buyer who has borne the duty and interest, has not passed on the incidence of such duty and interest to any other person;
(d) if amount found refundable relates to export duty paid on goods which has returned to exporter as specified in section 26;
(e) if amount relates to drawback of duty payable under section 74 and 75;
(f) if the duty or interest was borne by a class of applicants which has been notified for such purpose in the Official Gazette by the Central Government.
Interest on delayed refund :
6. The Customs has to finalize refund claims immediately after receipt of the refund application in proper form along-with all the documents. In case, any duty ordered to be refunded to an applicant is not refunded within 3 months from the date of receipt of application for refund, an interest @ 15% is to be paid to the applicant. The interest is to be paid for the period from the date immediately after the expiry of 3 months from the date of receipt of such application till be date of refund of such duty. For the purpose of payment of interest, the application is deemed to have been received on the date on which a complete application, as acknowledged by the proper officer of Customs, has been made.
7. Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner/Deputy Commissioner of Customs, the order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court, as the case may be is deemed to be an order for the purpose of payment of interest on delayed refund.
8. The interest on delayed refund is payable only in respect of delayed refunds of Customs duty and no interest is payable in respect of deposits such as deposits for project imports, security for provisional release of goods etc.
(Reference : The Customs Refund Application (Form) Regulations, 1995 issued vide notification no. 34/95(NT)-Customs, dated 26/5/1995, Notifications no. 32/95(NT)-Customs, dated 26/5/1995. Circular No. 59/95-Cus., dated 5/6/1995)
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